================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------
                                    FORM 10-K

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                        COMMISSION FILE NUMBER 000-23213

                             YOUNG INNOVATIONS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                MISSOURI                                 43-1718931
        (State of Incorporation)            (I.R.S. Employer Identification No.)

        13705 SHORELINE COURT EAST,                               63045
              EARTH CITY, MISSOURI                              (Zip Code)
   (Address of Principal Executive Offices)

        Registrant's telephone number, including area code: 314-344-0010

           Securities Registered Pursuant to Section 12(b) of the Act:

                                      NONE

           Securities registered pursuant to Section 12(g) of the Act:

                     COMMON STOCK, $0.01 PAR VALUE PER SHARE
                                (Title of Class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No
                                              ---    ---

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [X]

    Indicate by check mark whether the  registrant is an  accelerated  filer (as
defined  in Rule  12b-2 of the  Act).  Yes  X  No
                                           ---    ---
    On June 28, 2002,  the last business day of the  registrant's  most recently
completed second fiscal quarter,  the aggregate market value of the Common Stock
beneficially  held by  non-affiliates  of the Company was  approximately  $103.7
million (For purposes hereof,  directors and executive officers have been deemed
affiliates).

Number of shares  outstanding of the  Registrant's  Common Stock at February 28,
2003:

           8,941,793 shares of Common Stock, par value $.01 per share

ALL SHARE AND PER SHARE NUMBERS SET FORTH ABOVE GIVE EFFECT TO THE THREE-FOR-TWO
STOCK SPLIT EFFECTIVE ON MARCH 28, 2002 FOR HOLDERS OF RECORD AS OF THE CLOSE OF
BUSINESS ON MARCH 22, 2002.

    Portions of the Registrant's  definitive Proxy Statement to be filed for its
2003 Annual Meeting of Stockholders  are incorporated by reference into Part III
of this Report.
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<PAGE>




                            FORWARD LOOKING STATMENT

This Annual Report (including, without limitation, Item 1 -- "Business" and Item
7 -- "Management's Discussion and Analysis of Financial Condition and Results of
Operations") includes "forward-looking statements" within the meaning of Section
27A of the  Securities  Act of 1933,  as amended  (the  "Securities  Act"),  and
Section 21E of the  Securities  Exchange Act of 1934, as amended (the  "Exchange
Act").  All statements other than statements of historical facts included herein
are  "forward-looking  statements."  Although  the  Company  believes  that  the
expectations reflected in such forward-looking statements are reasonable, it can
give no  assurance  that such  expectations  will prove to be  correct.  Forward
looking  statements  include  statements  which are predictive in nature,  which
depend upon or refer to future events or conditions and which include words such
as "expects",  "anticipates",  "intends",  "plans", "believes",  "estimates", or
similar  expressions.  These statements are not guaranties of future performance
and the Company  makes no  commitment  to update or disclose  any  revisions  to
forward-looking statements, or any facts, events or circumstances after the date
hereof that may bear upon  forward-looking  statements.  Because such statements
involve risks and  uncertainties,  actual  actions and strategies and the timing
and  expected  results  thereof may differ  materially  from those  expressed or
implied  by such  forward-looking  statements.  These  risks  and  uncertainties
include, but are not limited to, those disclosed in this Annual Report and other
reports filed with the Securities and Exchange Commission.

Forward-looking  statements  involve  risk,  uncertainty,   and  their  ultimate
validity is affected by a number of factors, both specific and general. Specific
risk factors may be noted along with the statement itself.  However,  other more
general  risks and  uncertainties  which  are  inherent  in any  forward-looking
statement include,  but are not necessarily  limited to changes in:

     -    Demand for the Company's products
     -    Relationships with strategic customers, suppliers and product
          distributors
     -    Competition in each of the Company's product lines
     -    Dependence on and consolidation of distributors
     -    Successful integration of acquisitions
     -    Ability to manage the Company's growth
     -    Availability of acquisition candidates and the need for additional
          capital
     -    Technological change resulting in product obsolescence; dependence on
          new products
     -    Standard of care relating to dental health
     -    Government regulation
     -    Concentration of suppliers
     -    General economic conditions
     -    Operational capabilities due to natural disasters or other similar
          unforeseen events

This listing of factors is NOT intended to include ALL  potential  risk factors.
The  Company  makes no  commitment  to update  these  factors  or to revise  any
forward-looking  statements  for  events or  circumstances  occurring  after the
statement is issued.

At any time when the Company  makes  forward-looking  statements,  it desires to
take advantage of the "safe harbor" which is afforded such statements  under the
Private Securities Litigation Reform Act of 1995.


<PAGE>




                                     PART I

ITEM 1. BUSINESS.

Young Innovations, Inc. and subsidiaries (the "Company") develops,  manufactures
and markets supplies and equipment used by dentists,  dental hygienists,  dental
assistants and consumers. The Company's product offering includes disposable and
metal prophy angles, prophy cups and brushes,  panoramic X-ray machines,  dental
handpieces (drills) and related components,  orthodontic toothbrushes,  flavored
examination gloves,  children's toothbrushes,  children's toothpastes,  moisture
control products and infection control products. The Company's manufacturing and
distribution facilities are located in Missouri, California,  Indiana, Colorado,
Tennessee and Texas.

Young Dental was founded in the early 1900s.  As one of many small  suppliers to
the dental  profession,  Young Dental's strength was manufacturing  consistently
reliable dental products. As dentistry evolved,  Young Dental's employees worked
with  practicing  dentists and academics to identify  clinical  problems.  Young
Dental  staff used  their  engineering  and  manufacturing  expertise  to create
solutions to those problems.  Young  Innovations  was  incorporated in July 1995
shortly after the acquisition of The Lorvic  Corporation  ("Lorvic") in May 1995
by Young Dental, which added a new line of infection control products as well as
chemical  engineering  and  manufacturing  expertise.  In July 1996, the Company
acquired Denticator  International,  Inc. ("Denticator") and its line of popular
low-cost   disposable   prophylaxis   angles  to   complement   Young   Dental's
premium-priced  disposable  angles.  In  February  1998,  the  Company  acquired
Panoramic  Corporation  ("Panoramic"),  a leading  manufacturer  and marketer of
X-ray equipment sold or rented to dental  professionals in the United States. In
April 1999, the Company acquired Athena Technology, Inc. ("Athena"), which added
a line of dental  handpieces  and related  components to the  Company's  product
lines.  In June 2000, the Company  acquired  substantially  all of the assets of
Plak  Smacker,  Inc,  ("Plak  Smacker"),  which  added  a  line  of  orthodontic
toothbrushes,   children's   toothbrushes,   flavored  examination  gloves,  and
children's  toothpastes to the Company's product line. In June 2001, the Company
acquired   substantially  all  of  the  assets  of  the  Biotrol  and  Challenge
subsidiaries of Pro-Dex,  Inc.  (collectively,  "Biotrol"),  which significantly
strengthened the Company's infection control and preventive product offerings.

The Company believes that decades of providing  innovative  products to meet the
evolving  needs of the  dental  profession  have  earned  the  Company  a strong
reputation for quality, reliability and value.

The Company  markets its products  primarily in the United  States.  The Company
also markets its products in several  international  markets,  including Canada,
Europe, South America,  Central America and the Pacific Rim. International sales
represented less than 10% of the Company's total net sales in 2002.

The  Company is a  Missouri  corporation  with its  principal  executive  office
located at 13705  Shoreline Court East,  Earth City,  Missouri 63045, in the St.
Louis, Missouri metropolitan area; its telephone number is (314) 344-0010.

WEBSITE ACCESS TO COMPANY REPORTS

The Company makes  available free of charge  through our website,  www.ydnt.com,
it's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on  Form  8-K  and all  amendments  to  those  reports  as  soon  as  reasonably
practicable after such material is electronically  filed with the Securities and
Exchange  Commission.   The  Company's  internet  website  and  the  information
contained  therein or  incorporated  therein are not intended to be incorporated
into this Annual Report on Form 10-K.

See  Item  8.  Financial   Statements  and  Supplementary   Data  for  financial
information  about the professional  dental and retail segments of the Company's
business.


<PAGE>

RECENT DEVELOPMENTS

On March 12, 2002, the Board of Directors  declared a three-for-two  stock split
of the Company's  Common Stock in the form of a stock dividend  payable on March
28,  2002 to  shareholders  of record as of the close of  business  on March 22,
2002.  All share and per share  numbers in this Report give effect to such stock
split.

PRODUCTS

The Company  markets  disposable and metal prophy angles as well as prophy cups,
brushes  and pastes  (collectively,  "Prophy  Products"),  fluorides,  infection
control  products,  dental  X-ray  equipment,   dental  handpieces  and  related
components,  orthodontic  brushes and  supplies,  flavored  examination  gloves,
children's toothbrushes and toothpastes and other products.

    Prophy Products. The Company believes it manufactures and sells the broadest
line of prophy products in the domestic professional dental products market. The
Company is able to achieve its  substantial  share of this  market by  providing
prophy products at both premium and popular prices. The Company generally prices
its Young branded prophy  products at premium levels and its Denticator  branded
prophy  products  at lower price  levels.  The  Company's  broad range of prophy
products enables it to be a single-source supplier to its distributors.

Prophy products  consist of three  components:  1) an angle which is attached to
and extends  from a standard,  low-speed  dental  handpiece,  2) a rubber cup or
brush which is attached to the angle and performs  the cleaning  function and 3)
an abrasive paste normally applied to the patient's teeth with the cup or brush.
During the prophylaxis  process, the cup or brush is filled with abrasive paste,
which is applied to the teeth as the prophy cup rotates. The dental professional
polishes  both the  visible  portion  of the tooth and the  subgingival  portion
(below  the  gum  line).   The  Company's   prophy   products   include  several
configurations  of  metal  autoclavable  prophy  angles,  single-use  disposable
plastic prophy angles and several flavors and  consistencies  of pastes.  Prophy
cups and  brushes,  which are  paired  with  metal  prophy  angles,  are sold as
single-use  items.  Disposable  prophy angles are sold as assembled units with a
cup or brush  already  attached.  The Company  produces  and markets a number of
different  disposable prophy angles,  including both traditional right angle and
contra angle configurations.  Virtually all of the Company's metal prophy angles
are sealed against  penetration  of matter from patients'  mouths (thus reducing
the risk of cross-contamination and damage to the prophy angle) and are designed
for easy maintenance.  Because such metal prophy angles function  optimally only
when used with the  Company's  cups and brushes,  most dentists who purchase the
Company's metal prophy angles also purchase the Company's cups and brushes.

    Other Preventive  Products.  The Company's other preventive products include
fluorides  used in  dental  offices  and at home to  reduce  cavities  and tooth
sensitivity;  applicators  used by dental  professionals  to apply  fluoride  to
patients'  teeth;  and plaque  disclosants,  which are  liquids or tablets  that
identify the presence of plaque when applied to tooth surfaces.

    Infection Control Products. The Company's line of infection control products
includes  products  such  as  surface   disinfectants,   cleaners,   sterilizing
solutions,  indicator  tape and  tabs  used to  verify  the  effectiveness  of a
sterilizer,  Nyclave wrap used to wrap instruments during  sterilization so that
sterility is  maintained  until use,  barrier  products  used to wrap  operatory
knobs,  handles and other devices that cannot be  sterilized,  and surgical milk
and  instrument  care  products  used to  inhibit  corrosion,  remove  rust  and
lubricate   hinged   instruments  in  connection  with  the  autoclave   process
(sterilization through the use of steam).

    X-Ray Equipment.  The Company markets a line of dental X-ray equipment under
the Panoramic  brand name.  Panoramic's  PC-1000  X-ray machine  produces a high
quality  image of the entire  dental  arch in one X-ray film.  Panoramic  X-rays
present an  anatomical  assessment  of the entire  oral  cavity and  surrounding
structures.  The  Company  believes  this  allows a dentist  to more  accurately
diagnose and treat the  patient,  providing  better  overall  care.  Panoramic's
PC-1000/Laser  1000  cephalometric  X-ray  system  allows  analysis of the exact
relationship of various  anatomical  reference points of the patient's  anterior
skull profile.  General  dentists and  orthodontists  use these  calculations to
locate  and  predict  the  movement  of teeth in order to fit  braces  and other
orthodontia. The device is used by oral surgeons to detect pathology and also to
determine bone and teeth alignment before and after surgery.

    Handpieces and Components.  The Company  manufactures  and markets a line of
high-speed and low-speed dental  handpieces.  The Company also offers high-speed
and  low-speed  handpiece  repair  services.  High-speed  handpieces,   commonly
referred to as dental drills, are used in a variety of operative and restorative
dental  procedures.  Low-speed  handpieces  are  used  by  dentists  and  dental
hygienists in the teeth cleaning, or prophylaxis procedure.  Prophylaxis angles,


<PAGE>


such as the disposable or autoclavable  prophylaxis  angles sold by the Company,
attach to a  low-speed  handpiece,  which  provides  drive  power for the angle.
Low-speed  handpieces are also used in certain operative and restorative  dental
procedures,  though to a lesser extent than high-speed handpieces. The Company's
handpieces  are sold under the Athena  Champion  brand name,  as well as through
private label agreements with certain dental distributors.

    Orthodontic and Children's Homecare Products.  The Company markets a line of
orthodontic brushes,  flavored examination gloves,  children's  toothbrushes and
toothpastes, and miscellaneous supplies.

    Assisting and Other  Products.  The Company's  assisting and other  products
include disposable  aspiration  products used to remove blood,  saliva and other
matter during dental procedures;  cotton roll substitutes used to control saliva
and moisture during dental procedures; matrix bands used for tooth restorations;
rubber dam frames used to isolate  teeth during dental  procedures;  and etching
gels and bonding prep used to condition tooth surfaces for bonding.

    Private  Label  and  Original  Equipment  Manufactured  (OEM)  Products.  In
addition to branded  products,  the Company  designs,  develops  and  produces a
limited  number of private  label and OEM products for dental  distributors  and
other professional dental product manufacturers.

MARKETING AND DISTRIBUTION

The Company  markets its prophy,  preventive,  infection  control and  handpiece
products to dental professionals worldwide primarily through a network of dental
product   distributors.   The  Company   actively   supports   its   distributor
relationships with Company sales personnel and independent sales representatives
in the United States, independent sales representatives in Canada and Mexico and
sales representatives in countries outside of North America.

The Company also uses non-exclusive  distributors to service markets in a number
of other countries.  All major  distributors of dental products in North America
sell the Company's  products,  including Henry Schein, Inc. and Patterson Dental
Company,  which accounted for 13.8%,  and 15.0%  respectively,  of the Company's
sales in 2002. The Company has no formal agreements with its distributors.  They
generally  purchase  products  from the Company by purchase  order.  The Company
believes  these  arrangements  are  customary  in the  industry.  In addition to
marketing through  distributors in the United States, the Company sells products
directly  to  dental  and  dental  hygiene  schools,   Veterans   Administration
healthcare facilities and United States military bases.

The Company expends  considerable  effort educating its  distributors  about the
quality,  reliability and features of its products.  The Company also advertises
its products  through  industry  publications and direct mail. To supplement its
other  marketing  efforts,  the  Company  provides  product  samples  to  dental
professionals  and exhibits its products at industry  trade shows.  In addition,
the Company seeks to stimulate interest in its products by providing information
and marketing  materials to  influential  lecturers  and  prominent  experts and
consultants in the dental industry.

The  Company's  panoramic  X-ray  products are marketed in the United States and
Canada  directly to the end user,  primarily by direct  mail,  trade shows and a
limited amount of advertising in trade and professional journals. Panoramic also
utilizes distributors to market its products in a number of other countries.

The Company's  orthodontic  kits and related  supplies and flavored  examination
gloves are sold  directly to  orthodontists  and dentists.  Children's  homecare
products are marketed directly to dental  professionals and government programs,
as well as through retail mass merchandisers.

PRODUCT DEVELOPMENT

The  Company's  engineers  and  chemists  are focused on  developing  innovative
professional  dental  products  and  are  actively  involved  in  improving  the
Company's manufacturing processes.  Frequently,  these products are designed and
developed   in  response  to  needs   articulated   to  the  Company  by  dental
professionals. For example, the Company designed a short prophy cup for its line
of prophy angles to allow for easier access to the back of the patient's  mouth.
Many of the new  products or product  improvements  developed by the Company are
patented.  The Company has various  patents and trademarks but does not consider
its business to be materially dependent upon any individual patent or trademark.

<PAGE>


Research and development costs are expensed when incurred and totaled $596, $516
and $602 for 2002, 2001 and 2000, respectively.

MANUFACTURING AND SUPPLY

The Company  manufactures most of its products and product components other than
X-ray  equipment,  certain  infection  control  products,   children's  homecare
products,  orthodontic  kits and  related  supplies,  and  flavored  examination
gloves.

    Prophy  and  Other  Products.   The  Company  uses  a  variety  of  computer
numerically controlled machining centers, injection molding machines and robotic
assembly  machines and continues to invest in new and more  efficient  equipment
and  production  lines.  The primary  processes  involved in  manufacturing  the
Company's  products  consist of  precision  metal  turning and  milling,  rubber
molding,  plastic  injection  molding,  component parts  assembling and finished
goods packaging.  The Company has a one-third interest in International Assembly
Inc. ("IAI"), a contract manufacturer located in Mexico that assembles a portion
of its disposable prophy angles.

    Pastes,  Liquids and Gels.  The Company  blends and mixes all of its pastes,
liquids  and  gels  at the  Louisville,  Colorado,  Earth  City,  Missouri,  and
Brownsville,  Texas,  facilities.  The Company owns  equipment  used to form and
die-cut expanded polyethylene foam and to die-cut extruded plastic into finished
products  and  equipment  used to package its products in a variety of container
sizes, including prophy paste in unit-dose containers.

    Infection Control Products.  The Company manufactures a variety of infection
control products, sterilants and cleaners, at the Louisville, Colorado and Earth
City,  Missouri  facilities.  Additionally,  certain of the Company's  infection
control products are sourced from domestic manufacturers.

    X-Ray Equipment. X-ray equipment is manufactured and assembled by a contract
manufacturer  at the  Company's  premises in Fort Wayne,  Indiana.  The contract
manufacturer   supplies   labor,   purchases   most   components   and  performs
administrative  and logistical  functions  associated with the production of the
machines.  The Company owns all of the tooling,  engineering  documentation  and
assembly  fixtures used in the process.  The Company  manufactures its own X-ray
generators.

    Handpieces  and   Components.   The  Company  uses  a  variety  of  computer
numerically  controlled  machines  to  manufacture  a number  of the  components
required to produce its  high-speed  and  low-speed  handpieces.  Certain  other
handpiece  component  parts are  sourced  from a variety  of OEMs.  The  Company
assembles and provides  repair  services for its  handpieces,  and offers repair
services for a number of other handpiece brands.

    Orthodontic and Children's  Homecare  Products.  The Company sources most of
its orthodontic,  children's homecare products,  and flavored examination gloves
from  manufacturers  in Asia,  principally  China and  Malaysia.  Certain  other
toothbrush and toothpaste products are sourced from domestic manufacturers.

    Supply. The Company purchases a wide variety of raw materials, including bar
steel, brass, rubber and plastic resins from numerous suppliers. The majority of
the Company's purchases are commodities readily available at competitive prices.
The Company also purchases certain additional  miscellaneous products from other
manufacturers for resale.

 COMPETITION

The Company competes with manufacturers of both branded and private label dental
products  in its  product  offerings.  The  Company  believes  it is the leading
manufacturer of prophy angles and surface disinfectants used in the professional
dental market in the United States.  The Company also believes it is the leading
distributor of panoramic X-ray machines in the United States.

The markets  for the  Company's  products  are highly  competitive.  The Company
believes  that the  principal  competitive  factors  in all of its  markets  are
product  features,  reliability,  name  recognition,   established  distribution
network,  customer  service and, to a lesser extent,  price.  The relative speed
with which the Company can develop, complete testing, obtain regulatory approval
and sell commercial  quantities of new products is also an important competitive
factor.  Some of the Company's  competitors  have greater  financial,  research,

<PAGE>

manufacturing  and  marketing  resources  than the Company and include  DENTSPLY
International, Inc., Sybron Dental Specialties, Oral-B Laboratories, StarDental,
a  division  of  DentalEZ   Group,   KaVo  America,   Proctor  and  Gamble  Co.,
Colgate-Palmolive Co., and Planmeca OY.

OTHER

The Company has a credit  arrangement that provides for a three-year,  unsecured
revolving  credit  facility with an aggregate  commitment  of $40,000,  of which
$4,161 was being used at December 31, 2002. The Company  expects to fund working
capital  requirements from a combination of available cash balances,  internally
generated funds, and from the borrowing arrangements mentioned above.

Some  seasonality  exists in the business  driven by timing of price  increases,
rebate incentives, tax incentives, and holiday buying patterns and promotions.

EMPLOYEES

As of December 31,  2002,  the Company  employed  276 people,  none of whom were
covered by  collective  bargaining  agreements.  The Company  believes  that its
relations with its employees are good.

EXECUTIVE OFFICERS OF THE REGISTRANT

The executive  officers of the Company,  their ages and their positions with the
Company are set forth below. All officers serve at the pleasure of the board.

<TABLE>


        NAME                       AGE    POSITION                             PRINCIPAL OCCUPATION DURING PAST 5 YEARS
        ----                       ---    ---------                            ----------------------------------------
        <S>                         <C>   <C>                                  <C>
        George E. Richmond........  69    Chairman of the Board and Director   Chairman of the Board since 1997, Chief
                                                                               Executive Officer from 1995 to 2002, Director of
                                                                               the Company since its organization in 1995,
                                                                               President of Young Dental Manufacturing Company
                                                                               ("Young Dental") (predecessor to the Company)
                                                                               from 1961 until 1997.

        Alfred E. Brennan.........  50    President, Chief Executive Officer   President since July 1998, Chief Executive
                                          and Director                         Officer since January 2002 and Director of the
                                                                               Company since August 1997, Chief Operating
                                                                               Officer of the Company from October 1997 until
                                                                               May 2002.

        Arthur L. Herbst, Jr. ....  39    Executive Vice President, Chief      Chief Operating Officer since May 2002, Chief
                                          Operating Officer, Chief Financial   Financial Officer since February 1999, Secretary
                                          Officer, Secretary and Director      since April 2000, Executive Vice President since
                                                                               October 1998 and a Director of the Company since
                                                                               November 1997. Vice President and Portfolio
                                                                               Manager with Roberts, Glore & Co, a registered
                                                                               investment advisor, from September 1995 to
                                                                               November 1998.

        Eric J. Stetzel...........  46    Vice President                       Vice President since February 1999.  President
                                                                               of Young Acquisitions Company since February
                                                                               1998. President of Panoramic Rental Corp. since
                                                                               April 1998. President of Panoramic Corporation
                                                                               from 1986 to February 1998.

        Daniel E. Garrick.........  34    Vice President, Assistant Secretary  Vice President and Assistant Secretary since
                                                                               April 2001, Director of Business Development of
                                                                               Young Innovations since August 1999, Partner of
                                                                               Alta Management Consulting from December 1998 to
                                                                               August 1999, variety of consulting positions
                                                                               with Dewar Sloan, a management consulting
                                                                               company, from July 1993 to November 1998.

<PAGE>

         Sean T. O'Connor.........  34    Vice President                       Vice President since April 2001, Director of
                                                                               Business Development of Young Innovations since
                                                                               August 1999, Partner of Alta Management
                                                                               Consulting from December 1998 to August 1999,
                                                                               variety of consulting positions with Dewar Sloan
                                                                               from June 1994 to November 1998.

</TABLE>

ITEM 2. PROPERTIES.

The Company's facilities are as follows:


<TABLE>

                DESCRIPTION                   SQUARE FEET        LOCATION                   OWNED/LEASED
                -----------                   -----------        --------                   ------------
        <C>                                     <C>        <C>                    <C>
        Corporate Headquarters
           and Manufacturing.............       113,000    Earth City, Missouri                Owned
        Manufacturing....................        12,000     Brownsville, Texas                 Owned
        Office and Manufacturing.........        39,000     Fort Wayne, Indiana                Owned

        Office and Manufacturing.........         8,000     Fort Wayne, Indiana   Leased, on month to month terms
        Office and Manufacturing.........        27,000    Louisville, Colorado    Leased, expires December 2003
        Office and Distribution..........        24,000    Riverside, California     Leased, expires March 2004
        Distribution.....................        23,000    Morristown, Tennessee   Leased on month to month terms
        Office...........................         5,000     Algonquin, Illinois      Leased, expires March 2005
        Office...........................         2,000      Chicago, Illinois        Leased, expires May 2003


</TABLE>

The Company believes that its facilities are generally in good condition.

ITEM 3. LEGAL PROCEEDINGS.

On May 24, 2001,  Sultan Dental Products,  Ltd.  ("Sultan") filed a complaint in
the United States  District  Court for the Southern  District of New York (which
was  subsequently  dismissed by the  plaintiff  and refiled in the United States
District  Court for the  District of New Jersey on October 16,  2001)  asserting
that the Young  disposable  prophy angle  infringes a patent that is exclusively
licensed to Sultan. The complaint sought a permanent  injunction and unspecified
damages. In addition,  on January 25, 2002, the Company filed a complaint in the
United States District Court for the Eastern District of Missouri asserting that
the  manufacture of the Sultan  disposable  prophy angle infringes the Company's
U.S.  Patent No.  5,749,728.  The complaint  sought a permanent  injunction  and
damages.  On February 6, 2003,  the  Company and Sultan  settled  each case with
neither party paying a material amount.

The Company and its  subsidiaries  from time to time are also parties to various
legal proceedings arising in the normal course of business.  Management believes
that none of these proceedings,  if determined adversely,  would have a material
adverse  effect on the Company's  financial  position,  results of operations or
liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The  Common  Stock  trades on the  Nasdaq  National  Market  under the symbol of
"YDNT."

On March 12, 2002, the Board of Directors  declared a three-for-two  stock split
of the Company's  Common Stock in the form of a stock dividend  payable on March
28,  2002 to  shareholders  of record as of the close of  business  on March 22,
2002.  All share and per share  numbers in this Report give effect to such stock
split.


<PAGE>

The following  table,  as adjusted for the stock split,  sets forth the high and
low prices of the Common Stock as reported by the Nasdaq  National Market during
the last eight quarters.

           -------------------------------------------------------------------
                                                            Market Price
           -------------------------------------------------------------------
           Quarter                                      High           Low
           -------                                    -------       -------
           2001
           First....................................  $13.83        $11.83
           Second...................................  $16.33        $12.00
           Third....................................  $16.08        $12.00
           Fourth...................................  $17.83        $12.50

           2002
           First....................................  $22.83        $17.17
           Second...................................  $25.30        $21.72
           Third....................................  $28.26        $18.09
           Fourth...................................  $27.04        $20.09

           ------------------------------------------------------------------

On  February  28,  2003,  there were  approximately  37 holders of record of the
Company's Common Stock.

The Company has not paid cash dividends on its Common Stock since its inception.
The Company  currently  intends to retain  earnings for use in its business and,
therefore,  does not  anticipate  paying any cash  dividends in the  foreseeable
future.  Payment of cash  dividends,  if any,  will be at the  discretion of the
Company's  Board of  Directors  and will be  dependent  upon  the  earnings  and
financial  condition of the Company and any other factors deemed relevant by the
Board of Directors and will be subject to any applicable  restrictions contained
in the Company's then existing credit arrangements.


<PAGE>


ITEM 6. SELECTED FINANCIAL DATA.

The  following  table  presents  selected  financial  data of the Company.  This
historical data should be read in conjunction  with the  Consolidated  Financial
Statements and the related notes thereto in Item 8 and "Management's  Discussion
and Analysis of Financial  Condition and Results of  Operations"  in Item 7. All
amounts except per share data are expressed in thousands.

<TABLE>

                                                                                   YEAR ENDED DECEMBER 31,
                                                              -------------------------------------------------------------------
                                                               2002(1)      2001(2)        2000(3)        1999(4)       1998(5)
                                                              --------      --------      --------      --------       --------

<S>                                                           <C>           <C>           <C>           <C>            <C>
INCOME STATEMENT DATA:
  Net sales ............................................      $ 72,218      $ 63,659      $ 51,387      $ 42,712       $ 36,595
  Cost of goods sold ...................................        33,787        30,017        24,000        18,825         16,467
                                                              --------      --------      --------      --------       --------
  Gross profit .........................................        38,431        33,642        27,387        23,887         20,128
   Selling, general and administrative expenses ........        19,433        17,897        13,754        12,195         10,623
                                                              --------      --------      --------      --------       --------
  Income from operations ...............................        18,998        15,745        13,633        11,692          9,505
  Interest expense and other, net ......................           286           225           108           (32)          (326)
                                                              --------      --------      --------      --------       --------
  Income before provision for income taxes .............        18,712        15,520        13,525        11,724          9,831
  Provision for income taxes ...........................         7,301         5,975         5,220         4,572          3,782
                                                              --------      --------      --------      --------       --------

  Net income ...........................................      $ 11,411      $  9,545      $  8,305      $  7,152       $  6,049
                                                              ========      ========      ========      ========       ========
  Basic earnings per share (6) .........................      $   1.29      $   0.99      $   0.85      $   0.73       $   0.60
                                                              ========      ========      ========      ========       ========
  Basic weighted average common shares
     Outstanding (6) ...................................         8,876         9,662         9,752         9,848         10,145
  Diluted earnings per share (6) .......................      $   1.22      $   0.96      $   0.84      $   0.72       $   0.59
                                                              ========      ========      ========      ========       ========
  Diluted weighted average common shares
     Outstanding (6) ...................................         9,331         9,904         9,914         9,880         10,208



                                                                                    AS OF DECEMBER 31,
                                                              -----------------------------------------------------------------
                                                                  2002        2001(2)       2000(3)      1999(4)       1998(5)
                                                              --------      --------      --------      --------       --------
BALANCE SHEET DATA:
  Working capital ........................................     $12,645       $12,439       $11,578       $ 9,438       $10,100
  Total assets ...........................................      84,988        83,605        69,592        60,336        54,744
  Total debt (including current maturities) ..............       4,304        16,984           592           893          --
  Stockholders' equity ...................................      67,670        55,885        60,437        52,137        48,201

----------
(1)  Weighted  average  common shares  outstanding  decreased  from 2001 to 2002
     primarily as a result of the Company's  buyback of 1,050 shares from George
     E. Richmond, its Chairman of the Board and then Chief Executive Officer, in
     November 2001.

(2)  On June 12, 2001 the Company  acquired  substantially  all of the assets of
     the Biotrol and  Challenge  subsidiaries  of  Pro-Dex,  Inc.  (collectively
     "Biotrol").  The income statement data for the year ended December 31, 2001
     include  results of  operations  for  Biotrol  from June 12,  2001  through
     December 31, 2001.  The balance  sheet data as of December 31, 2001 include
     the Biotrol acquisition.

(3)  On June 13, 2000 the Company  acquired  substantially  all of the assets of
     Plak Smacker.  The income  statement  data for the year ended  December 31,
     2000  include  results of  operations  for Plak  Smacker from June 13, 2000
     through  December 31, 2000.  The balance sheet data as of December 31, 2000
     include the Plak Smacker acquisition.

(4)  On April 2, 1999, the Company  acquired  Athena.  The income statement data
     for the year ended  December 31, 1999  include  results of  operations  for
     Athena from April 2, 1999 through December 31, 1999. The balance sheet data
     as of December 31, 1999 include the Athena acquisition.

(5)  On February 27, 1998, the Company acquired  substantially all of the assets
     of Panoramic.  The income  statement  data for the year ended  December 31,
     1998 include  results of operations  for  Panoramic  from February 27, 1998
     through  December 31, 1998.  The balance sheet data as of December 31, 1998
     include the Panoramic acquisition.


<PAGE>

(6)  Earnings per share data and shares  outstanding  retroactively  reflect the
     impact of the  three-for-two  stock split of the Company's  Common Stock in
     the form of a stock dividend  payable on March 28, 2002 to  shareholders of
     record as of the close of  business  on March 22,  2002.  All share and per
     share numbers give effect to such stock split.


</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS (IN THOUSANDS).

GENERAL

The Company  develops,  manufactures  and markets supplies and equipment used by
dentists,  dental  hygienists,  dental  assistants and consumers.  The Company's
product offering  includes  disposable and metal prophy angles,  prophy cups and
brushes, panoramic X-ray machines, moisture control products,  infection control
products,  dental  handpieces  (drills)  and  related  components,   orthodontic
toothbrushes,   flavored   examination  gloves,   children's   toothbrushes  and
children's toothpastes.  The Company believes it is the leading manufacturer and
distributor  of prophy  angles and cups (used in teeth  cleaning  and  polishing
procedures) and dental surface  disinfectants in the United States.  The Company
also believes it is the leading  distributor of panoramic X-ray equipment in the
United States.

The principal  components of the Company's  growth  strategy are to continuously
improve its  operating  efficiencies,  to develop new  products  and to complete
strategic acquisitions. In order to help fund the Company's strategy for growth,
the Company  completed an initial public  offering of 3,450 shares of its Common
Stock in November 1997, resulting in net proceeds of approximately  $25,200. The
Company used the proceeds to repay debt incurred with previous  acquisitions and
to fund future strategic acquisitions.

On February 27, 1998,  the Company  acquired the assets of Panoramic for $13,900
cash plus 94 shares of the  Company's  Common  Stock and  assumed  approximately
$3,900 of  Panoramic's  liabilities,  of which $2,600 was repaid at closing.  On
April 2, 1999, the Company  acquired the stock of Athena for $4,200 in cash plus
$232 in notes payable to the previous shareholders. On June 13, 2000 the Company
acquired the assets of Plak Smacker for  approximately  $7,100 in cash.  On June
12, 2001 the Company acquired the assets of Biotrol for approximately  $8,900 in
cash.  The results of  operations  for these  acquisitions  are  included in the
consolidated   financial   statements   since  the  date  of  acquisition.   The
acquisitions were accounted for as purchase transactions.

On March 12, 2002, the Board of Directors  declared a three-for-two  stock split
of the Company's  Common Stock in the form of a stock dividend  payable on March
28,  2002 to  shareholders  of record as of the close of  business  on March 22,
2002.  All share and per share  numbers in this Report give effect to such stock
split.

CRITICAL ACCOUNTING POLICIES

In December 2001, the SEC requested that all  registrants  include in their MD&A
their  most  critical  accounting  policies,  the  judgments  and  uncertainties
affecting the application of those policies,  and the likelihood that materially
different  amounts would be reported under different  conditions using different
assumptions.  The SEC indicated that a "critical accounting policy" is one which
is both  important to the  portrayal of the  company's  financial  condition and
results  and  requires  management's  most  difficult,   subjective  or  complex
judgments,  often as a result of the need to make estimates  about the effect of
matters that are inherently uncertain.  We believe that the following accounting
policies fit this definition:

     Allowance  for doubtful  accounts - The Company has 42% of its December 31,
2002 accounts receivable balance with two large customers (see footnote 5 of the
financial  statements  set  forth in Item 8) with the  remaining  balance  among
numerous  customers,  some  of  which  are  international.  Accounts  receivable
balances are subject to credit risk. Management has reserved for expected credit
losses,  sales returns and allowances,  and discounts based upon past experience
as well as  knowledge  of current  customer  information.  We  believe  that our
reserves  are  adequate.  It is  possible,  however,  that the  accuracy  of our
estimation   process   could  be  impacted  by  unforeseen   circumstances.   We
continuously  review our reserve balance and refine the estimates to reflect any
changes in circumstances.

     Inventory - The Company  values  inventory  at the lower of cost or market.
Inventory  values are based upon  standard  costs which  approximate  historical
costs.  Management  regularly reviews inventory quantities on hand and records a
provision for excess or obsolete  inventory based primarily on estimated product

<PAGE>

demand and other knowledge related to the inventory. If demand for the Company's
products is significantly different than Management's expectations,  the reserve
could be  materially  impacted.  Changes to the reserves are included in cost of
goods sold.

   Goodwill and other intangible  assets - The Company adopted the provisions of
SFAS No. 142 effective  January 1, 2002.  Goodwill and other  long-lived  assets
with indefinite useful lives are reviewed by Management for impairment  annually
or whenever events or changes in circumstances  indicate the carrying amount may
not be recoverable.  If indicators of impairment are present,  the determination
of the amount of impairment  would be based on  Management's  judgment as to the
future  operating  cash flows to be generated from the assets  throughout  their
estimable useful lives.  SFAS No. 142 also requires that intangible  assets with
estimable useful lives be amortized over their respective estimated useful lives
to their estimated  residual  values,  and reviewed for impairment in accordance
with SFAS No. 121.

   Contingencies  - The  Company  and its  subsidiaries  from  time to time  are
subject to various  contingencies,  including legal  proceedings  arising in the
normal course of business.  Management,  with the  assistance of external  legal
counsel,  performs an analysis of current litigation and will record liabilities
if a loss is probable and can be reasonably estimated.  The Company believes the
reserve  is  adequate,  however  it can not  guarantee  that  costs  will not be
incurred in excess of current estimates.

RESULTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)

The following table sets forth,  for the periods  indicated,  certain items from
the Company's statements of income expressed as a percentage of net sales.

                                                        YEAR ENDED DECEMBER 31,
                                                     ---------------------------
                                                        2002      2001     2000
                                                     --------   -------  -------

Net sales..........................................    100.0%    100.0%   100.0%

Cost of goods sold.................................     46.8      47.2     46.7
                                                      ------    ------   ------

Gross profit.......................................     53.2      52.8     53.3

Selling, general and administrative expenses.......     26.9      28.1     26.8
                                                      ------    ------   ------

Income from operations.............................     26.3      24.7     26.5

Interest expense and other, net....................       .4        .3       .2
                                                      ------    ------   ------

Income before provision for income taxes...........     25.9      24.4     26.3

Provision for income taxes.........................     10.1       9.4     10.1
                                                      ------    ------   ------

Net income.........................................     15.8%     15.0%    16.2%
                                                      ======    ======   ======


YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

    Net Sales - Net sales  increased  $8,559,  or 13.4%, to $72,218 in 2002 from
$63,659 in 2001.  The increase was  primarily  attributable  to the inclusion of
Biotrol sales for the full period ($4,205 of additional sales) as well as growth
in the Professional and Retail Segments.

    Gross Profit - Gross profit increased  $4,789,  or 14.2%, to $38,431 in 2002
from $33,642 in 2001. Gross profit benefited from the acquisition of Biotrol and
from  increased  sales in the  Professional  and Retail  Segments.  Gross margin
increased  to 53.2% of net sales in 2002 from 52.8% in 2001.  This  increase was
primarily a result of the full year  inclusion  of Biotrol  and overall  product
mix.

    Selling,  General,  and  Administrative  Expenses  ("SG&A") - SG&A  expenses
increased $1,536 million,  or 8.6%, to $19,433 in 2002 from $17,897 in 2001. The
increase  was  primarily a result of  additional  SG&A  expenses  related to the
Biotrol acquisition as well as increased spending in the Professional and Retail
segments.  These administrative expenses are partially offset by the elimination
of the amortization of goodwill ($1,215 for 2001) starting in 2002 in accordance
with the  adoption  of SFAS  142.  As a  percent  of net  sales,  SG&A  expenses
decreased  to  26.9% in 2002  from  28.1%  in 2001 as a  result  of the  factors
explained above.


<PAGE>

    Income from Operations - Income from operations  increased $3,253, or 20.7%,
to $18,998 in 2002 from  $15,745  in 2001 as a result of the  factors  explained
above.

      Interest Expense (Income),  net - Interest expense, net increased $134, or
90.5%,  to  $282  in  2002  from  $148  in  2001.  The  increase  was  primarily
attributable to additional interest expense resulting from increased  borrowings
on the Company's  credit  facility  during the second half of 2001 that remained
outstanding for a majority of 2002. These borrowings  related to the acquisition
of Biotrol in June 2001 and the  repurchase  of 1,050  shares of common stock in
November 2001.

      Other Expense,  net - Other expense, net decreased $73, to $4 in 2002 from
$77 in 2001. The decrease was primarily attributable to lower expense associated
with the Company's one-third interest in IAI as well as additional rental income
from leased space at the Company's Earth City facility.

    Provision for Income Taxes - Provision for income taxes increased  $1,326 in
2002 to $7,301  from  $5,975 for 2001  primarily  as a result of higher  pre-tax
income.  The  effective  tax rate of 39.0%  in 2002  compares  to 38.5% in 2001,
reflecting the continued phase-in of the 35% federal tax rate,  partially offset
by the elimination of goodwill amortization expense in accordance with SFAS 142.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

    Net Sales - Net sales increased  $12,272,  or 23.9%, to $63,659 in 2001 from
$51,387 in 2000. The increase was primarily  attributable  to the inclusion of a
partial year of Biotrol sales  ($5,821 of  additional  sales) and a full year of
Plak Smacker sales ($7,161 of additional  sales),  as well as increased sales of
products  in the  Professional  and Retail  Segments,  which were  offset by the
discontinuation of sales of certain unprofitable and non-strategic products.

    Gross Profit - Gross profit increased  $6,255,  or 22.8%, to $33,642 in 2001
from $27,387 in 2000. Gross profit was favorably  impacted by the acquisition of
Biotrol and a full year of Plak Smacker.  Gross margin decreased to 52.8% of net
sales in 2001 from 53.3% in 2000.  This decrease was primarily  attributable  to
the full year inclusion of Plak Smacker sales,  which typically earn lower gross
margins.

    Selling,  General,  and  Administrative  Expenses  ("SG&A") - SG&A  expenses
increased  $4,143,  or 30.1%,  to $17,897 in 2001 from $13,754 in 2000 primarily
due to the  inclusion  of  expenses  of Biotrol  for a partial  year and of Plak
Smacker for a full year. As a percent of net sales,  SG&A expenses  increased to
28.1% in 2001 from  26.8% in 2000  primarily  due to  higher  SG&A  spending  at
Biotrol.

    Income from Operations - Income from operations  increased  $2,112 or 15.5%,
to $15,745 in 2001 from  $13,633  in 2000 as a result of the  factors  explained
above.

      Interest Expense (Income),  net - Interest expense,  net increased $168 to
$148 in 2001 from ($20) in 2000.  The increase  was  primarily  attributable  to
additional interest expense resulting from increased borrowings on the Company's
credit  facility to fund the Biotrol  acquisition  as well as the  repurchase of
1,050 shares of common stock in November 2001.

      Other Expense,  net - Other expense, net decreased $51 to $77 in 2001 from
$128 in 2000.  The decrease was  primarily  attributable  to  additional  rental
income from leased space at the Company's Earth City facility for the period.

    Provision  for Income Taxes - Provision for income taxes  increased  $755 in
2001 to $5,975  from  $5,220 for 2000  primarily  as a result of higher  pre-tax
income.  The effective tax rate of 38.5% in 2001 compares to 38.6% in 2000.  The
2001 rate reflects savings  resulting from federal and state tax planning offset
by the phase-in of the 35% federal tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  the Company has financed its  operations  primarily  through cash
flow from operating activities and, to a lesser extent, through borrowings under
its  credit  facility.  Net cash flow from  operating  activities  was  $16,258,
$14,142, and $7,699 for 2002, 2001 and 2000, respectively.  Capital expenditures
for property,  plant and equipment were $2,660, $6,983, and $2,176 in 2002, 2001
and  2000,  respectively.  Capital  expenditures  in 2001  included  $3,309  for


<PAGE>

additional  manufacturing and office space in Earth City, MO and Fort Wayne, IN,
and $2,294 for additional machinery and equipment. Consistent with the Company's
historical  capital  expenditures,  future capital  expenditures are expected to
include facility improvements, panoramic X-ray machines for the Company's rental
program, production machinery and information systems. Other significant uses of
cash over the three years are as follows:

In November and December 2002,  the Company  repurchased 81 shares of its common
stock from various  stockholders  for $1,709.  The purchase was financed through
borrowings on the Company's credit facility.

On November 2, 2001, the Company purchased 1,050 shares of its common stock from
George E. Richmond,  its Chairman for  approximately  $14,900.  The purchase was
financed through borrowings on the Company's credit facility.

On June 12, 2001, the Company acquired  substantially all the assets of Biotrol.
The  Company  originally  paid  $9,343 in cash,  with  money set aside in escrow
pending the settlement of any indemnification claims. Upon final settlement, the
purchase price was $8,912.  The purchase  price was financed with  borrowings on
the Company's credit facility and with cash flows generated from operations.

On June 13, 2000, the Company acquired  substantially  all of the assets of Plak
Smacker for  approximately  $7,100 in cash. The purchase  price was  principally
financed with  borrowings on the Company's  credit  facility and cash  generated
from operations.

 During  March  2001,  the  Company  entered  into  a  one-year  $20,000  credit
agreement.  The agreement was amended in April and September 2001, to extend the
term to three-years and increase the borrowing  capacity to $40,000.  Borrowings
under the  agreement  bear  interest at rates ranging from LIBOR + 1% to LIBOR +
2.25% or Prime to Prime + .5%.  Commitment  fees for this  agreement  range from
..15% to .25% of the unused  balance.  The  agreement is  unsecured  and contains
various financial and other covenants.  As of December 31, 2002, the Company was
in compliance  with all of these  covenants.  During 2002, the Company  borrowed
under the credit facility to finance the acquisition of Biotrol,  the repurchase
of Common Stock, investments in facilities and equipment and for working capital
needs. At December 31, 2002,  there were $4,161 in outstanding  borrowings under
this agreement.  Management believes through its operating cash flows as well as
borrowing capabilities, the Company has adequate liquidity and capital resources
to meet its needs on a short and long-term basis.

The Company has certain contractual obligations and / or commercial commitments.
The following table represents the aggregate  maturities and expiration  amounts
of various classes of obligations at December 31, 2002 (in thousands):

<TABLE>


                                                                           PAYMENTS DUE BY PERIOD
                                                 ---------------------------------------------------------------------------
                                                                  LESS THAN                                    AFTER 5
                                                                  ---------                                    -------
CONTRACTUAL OBLIGATIONS                             TOTAL         1 YEAR         1-3 YEARS       4-5 YEARS      YEARS
                                                    -----         ------         ---------       ---------      -----

<S>                                              <C>              <C>          <C>             <C>                  <C>
Capital Lease Obligations......................  $     143        $    75      $     68              --             --
Operating Leases (including buildings).........        915            615           288        $     12             --
Long-Term Debt.................................      4,161             --         4,161              --             --
                                                  --------       --------      --------        --------      ---------
Total Contractual Cash.........................   $  5,219         $  690      $  4,517        $     12             --
                                                 ---------       --------      --------        --------      ---------

</TABLE>

RECENT FINANCIAL ACCOUNTING STANDARDS BOARD STATEMENTS

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 143,
"Accounting  for Asset  Retirement  Obligations."  Under SFAS No. 143,  the fair
value of a  liability  for an asset  retirement  obligation  is  required  to be
recognized  in the period in which it is  incurred if a  reasonable  estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part  of  the  carrying  amount  of the  long-lived  asset.  SFAS  No.  143  was
implemented by the Company beginning  January 1, 2002.  Adoption of SFAS No. 143
did not have a material impact on the consolidated  financial  statements of the
Company.

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets." SFAS No. 144
addresses  financial  accounting  and reporting for the impairment of long-lived
assets and for the long-lived  assets to be disposed of and supersedes  SFAS No.

<PAGE>

121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed of." SFAS No. 144  establishes a single  accounting  model
for  long-lived  assets to be  disposed of by sale and  resolves  implementation
issues  related to SFAS No.  121.  SFAS No. 144 was  implemented  by the Company
beginning  January  1,  2002.  Adoption  of SFAS No. 144 did not have a material
impact on the consolidated financial statements of the Company.

In April 2002,  the Financial  Accounting  Standards  Board issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No.
13,  and  Technical  Corrections."  SFAS No.  145  addresses  classification  of
extinguishment  of debt and requires  accounting for lease  modifications in the
same manner as  sale-leaseback  transactions.  This  Statement also amends other
existing  authoritative  pronouncements to make various  technical  corrections,
clarify meanings, or describe their applicability under changed conditions. SFAS
No. 145 was implemented by the Company  beginning  January 1, 2002.  Adoption of
SFAS No.  145 did not  have a  material  impact  on the  consolidated  financial
statements of the Company.

In June 2002,  the  Financial  Accounting  Standards  Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal  Activities."  Under SFAS
No. 146,  liabilities  are  recognized  for exit and disposal  costs only when a
liability is incurred,  rather than at the date of an entity's  commitment to an
exit plan. SFAS No. 146 is effective for exit or disposal  activities  initiated
after December 31, 2002. Adoption of SFAS No. 146 did not have a material impact
on the consolidated financial statements of the Company.

In December 2002, the Financial  Accounting  Standards Board issued SFAS No.148,
"Accounting for Stock-Based  Compensation  -- Transition and  Disclosure."  This
statement  amends SFAS No. 123,  "Accounting for Stock-Based  Compensation",  to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of  accounting  for  stock-based  employee  compensation.  In
addition,  this statement amends the disclosure  requirements of SFAS No. 123 to
require prominent  disclosures in both annual and interim  financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect  of the  method  used on  reported  results.  FAS No.  148  provides  for
voluntary  adoption of the fair value  method for  entities  with  fiscal  years
ending  after  December  15,  2002.  The  Company  currently  has not made  this
election.

In  November  2002,  the  Financial   Accounting  Standards  Board  issued  FASB
Interpretation No.45,  "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including  Indirect  Guarantees  of  Indebtedness  of Other."  This
interpretation  elaborates on the  disclosures  to be made by a guarantor in its
interim and annual  financial  statements  about its  obligations  under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize,  at the  inception of a guarantee,  a liability for the fair value of
the obligation undertaken in issuing the guarantee.  The initial recognition and
initial  measurement  provisions  of this  Interpretation  are  applicable  on a
prospective  basis to  guarantees  issued or modified  after  December 31, 2002,
irrespective of the guarantor's fiscal year-end. The disclosure  requirements in
this Interpretation are effective for financial  statements of interim or annual
periods ending after December 31, 2002.  Management  does not believe the impact
of this Interpretation will be material to the consolidated financial statements
of the Company.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Company's  operations result primarily from changes
in interest rates and changes in foreign exchange rates.  From time to time, the
Company  finances  acquisitions,  capital  expenditures  and its working capital
needs with borrowings  under a revolving  credit  facility.  Due to the variable
interest rate feature on the debt, the Company is exposed to interest rate risk.
Based on the  Company's  average debt  balance,  a  theoretical  100 basis point
increase in interest rates would have resulted in approximately  $115 and $81 of
additional  interest  expense in the years  ended  December  31,  2002 and 2001,
respectively.  In 2000, the Company did not carry  significant  borrowings under
its credit facility and thus interest rate risk would have been immaterial.

Sales of the Company's  products in a given  foreign  country can be affected by
fluctuations in the exchange rate.  However,  the Company sells less than 10% of
its products  outside the United States.  Of these foreign sales,  approximately
97%  are  denominated  in  US  dollars  with  the  remaining   approximately  3%
denominated  in Canadian  dollars.  As a result,  the Company does not feel that
foreign currency movements have a material impact on its financial statements.

The Company  does not use  derivatives  to manage its  interest  rate or foreign
exchange rate risks.


<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
Young Innovations, Inc.:

We  have  audited  the   accompanying   consolidated   balance  sheet  of  Young
Innovations,  Inc. and  subsidiaries  as of December  31, 2002,  and the related
consolidated  statements of income,  stockholders' equity and cash flows for the
year then ended.  In  connection  with our audit of the  consolidated  financial
statements,  we also  have  audited  the  financial  statement  schedule.  These
consolidated  financial  statements and the financial statement schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated  financial  statements and the financial statement
schedule  based on our audit.  The  consolidated  financial  statements  and the
financial  statement schedule of Young Innovations,  Inc. and subsidiaries as of
December 31, 2001, and for each of the years in the two-year  period then ended,
were  audited by other  auditors  who have  ceased  operations.  Those  auditors
expressed an unqualified opinion on those consolidated  financial statements and
financial  statement  schedule,  before the revisions described in Note 9 to the
consolidated  financial  statements,  in their  reports  dated  February 4, 2002
(except for the information related to the stock split,  discussed in Note 1, as
to which the date is March 22, 2002).

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Young Innovations,
Inc.  and  subsidiaries  as of  December  31,  2002,  and the  results  of their
operations  and their  cash  flows for the year then  ended in  conformity  with
accounting principles generally accepted in the United States of America.  Also,
in our opinion,  the related financial  statement  schedule,  when considered in
relation  to the  basic  consolidated  financial  statements  taken  as a whole,
presents fairly, in all material respects, the information set forth therein.

As discussed  above,  the  consolidated  financial  statements and the financial
statement  schedule of Young  Innovations,  Inc. and subsidiaries as of December
31,  2001,  and for each of the years in the  two-year  period  then  ended were
audited by other  auditors who have ceased  operations.  As described in Note 9,
these  consolidated  financial  statements  have been  revised  to  include  the
transitional disclosures required by Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assets,  which was adopted by the Company
as of January 1, 2002. In our opinion, the disclosures for 2001 and 2000 in Note
9 are appropriate.  However,  we were not engaged to audit,  review or apply any
procedures  to the 2001  and 2000  consolidated  financial  statements  of Young
Innovations,  Inc. and subsidiaries  other than with respect to such disclosures
and, accordingly, we do not express an opinion or any other form of assurance on
the 2001 and 2000 consolidated financial statements taken as a whole.


/s/ KPMG LLP

St. Louis, Missouri
February 3, 2003



<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Young Innovations, Inc.:

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Young
Innovations,  Inc. (a Missouri  corporation) and subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of income,  stockholders'
equity and cash flows for each of the three years in the period  ended  December
31, 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Young Innovations,
Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations  and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting  principles  generally accepted
in the United States.



ARTHUR ANDERSEN LLP

Chicago, Illinois
February 4, 2002 (except with respect to the matter  discussed in Note 22, as to
which the date is March 22, 2002)


THIS IS A COPY OF THE AUDIT REPORT  PREVIOUSLY  ISSUED BY ARTHUR  ANDERSEN  LLP,
WHICH HAS CEASED OPERATIONS, IN CONNECTION WITH YOUNG INNOVATIONS, INC.'S FILING
ON FORM 10-K FOR THE YEAR ENDED  DECEMBER  31,  2001.  THIS AUDIT REPORT HAS NOT
BEEN  REISSUED BY ARTHUR  ANDERSEN  LLP IN  CONNECTION  WITH THIS FILING ON FORM
10-K. SEE EXHIBIT 23.2 FOR FURTHER DISCUSSION.

<PAGE>


<TABLE>

                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>

                                                                                                      December 31
                                                                                                ------------------------
                                                                                                   2002        2001
                                                                                                   ----        ----

                                                        ASSETS

<S>                                                                                             <C>         <C>
Current assets:
   Cash and cash equivalents...............................................................     $      554  $       82
   Trade accounts receivable, net of allowance for doubtful accounts of $385
     and $444, in 2002 and 2001, respectively..............................................         10,010       9,916
   Inventories.............................................................................          7,861       7,158
   Other current assets....................................................................          2,405       1,848
                                                                                                ----------  ----------
           Total current assets............................................................         20,830      19,004
Property, plant and equipment, net.........................................................         18,962      18,759
Goodwill  .................................................................................         42,414      44,384
Other intangible assets....................................................................          2,302         307
Other assets...............................................................................            480       1,151
                                                                                                ----------  ----------
                Total assets...............................................................     $   84,988  $   83,605
                                                                                                ==========  ==========

                                         LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt....................................................     $       75  $      141
   Accounts payable and accrued liabilities................................................          8,110       6,424
                                                                                                ----------  ----------
           Total current liabilities.......................................................          8,185       6,565
Long-term debt.............................................................................          4,229      16,843
Deferred income taxes......................................................................          4,904       4,312
Stockholders' equity:
   Common stock, voting, $.01 par value, 25,000 shares authorized, 8,905 and 8,921
     shares issued and outstanding, net of treasury stock, in 2002 and 2001,
     respectively..........................................................................             89          89
   Additional paid-in capital..............................................................         28,050      27,828
   Deferred stock compensation.............................................................         (1,271)     (1,608)
   Retained earnings.......................................................................         58,772      47,361
   Common stock in treasury, at cost, 1,338 and 1,418 shares in 2002 and 2001,
      respectively                                                                                 (17,970)     (17,785)
                                                                                                ----------  ----------
           Total stockholders' equity......................................................         67,670      55,885
                                                                                                ----------  ----------
                Total liabilities and stockholders' equity.................................     $   84,988  $   83,605
                                                                                                ==========  ==========



        The accompanying notes are an integral part of these statements.

</TABLE>

<PAGE>


<TABLE>

                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)



<CAPTION>
                                                                                    Years Ended December 31
                                                                          --------------------------------------------
                                                                               2002           2001           2000
                                                                               ----           ----           ----

<S>                                                                       <C>             <C>            <C>
Net sales............................................................     $      72,218   $      63,659  $      51,387
     Cost of goods sold..............................................            33,787          30,017         24,000
                                                                          -------------   -------------  -------------
Gross profit.........................................................            38,431          33,642         27,387
     Selling, general and administrative expenses....................            19,433          17,897         13,754
                                                                          -------------   -------------  -------------
Income from operations...............................................            18,998          15,745         13,633
     Interest expense (income), net..................................               282             148            (20)
     Other expense, net..............................................                 4              77            128
                                                                          -------------   -------------  -------------
Income before provision for income taxes.............................            18,712          15,520         13,525
      Provision for income taxes.....................................             7,301           5,975          5,220
                                                                          -------------   -------------  -------------
Net income                                                                $      11,411   $       9,545  $       8,305
                                                                          =============   =============  =============
Basic earnings per share.............................................     $        1.29   $        0.99  $        0.85
                                                                          =============   =============  =============
Diluted earnings per share...........................................     $        1.22   $        0.96  $        0.84
                                                                          =============   =============  =============
Basic weighted average shares outstanding............................             8,876           9,662          9,752
                                                                                =======        ========       ========
Diluted weighted average shares outstanding..........................             9,331           9,904          9,914
                                                                                =======        ========       ========



         The accompanying notes are an integral part of these statements.

</TABLE>

<PAGE>


<TABLE>

                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<CAPTION>



                                        Additional                Common
                              Common     Paid-In     Retained    Stock in   Deferred Stock                    Comprehensive
                              Stock      Capital     Earnings    Treasury    Compensation        Total            Income
                              -----      -------     --------    --------    ------------        -----            ------

<S>                           <C>        <C>         <C>         <C>            <C>           <C>                <C>
BALANCE, December 31,
  1999                        $ 98       $ 26,050    $ 29,511    $ (3,522)        -           $ 52,137
     Net income...........       -           -          8,305          -          -              8,305           $ 8,305
     Common stock
       purchased...........      -           -             -         (104)        -               (104)
     Stock options
       exercised..........       -          10             -           89         -                99
     Comprehensive income.
                               ___        ______     _______     ________     _______         ________           $ 8,305
                                                                                                                 =======
BALANCE, December 31,
  2000                          98         26,060     37,816       (3,537)        -             60,437
     Net income...........       -           -         9,545           -          -              9,545           $ 9,545
     Common stock
       purchased....            (9)          -          -         (14,908)        -            (14,917)
     Stock options
       exercised..........       -          86          -             660         -                746
     Deferred stock
       compensation.......       -       1,682          -              -      $ (1,682)            -
     Amortization of
       deferred stock
       compensation.......       -           -          -              -            74              74
                                                                       -
     Comprehensive income.
                               ___        _______   _________   _________    ________        _________          $ 9,545
                                                                                                                ========
BALANCE, December 31,
  2001                          89         27,828      47,361     (17,785)      (1,608)         55,885
     Net income...........       -          -          11,411          -            -           11,411         $ 11,411
     Common stock
       purchased...........      -          -           -          (1,709)          -           (1,709)
     Stock options
       exercised..........       -           222        -           1,524           -            1,746
     Amortization of
       deferred stock
       compensation.......       -           -          -            -            337              337
     Comprehensive income.       -           -          -            -              -              -           $ 11,411
                                                                                                               ========
BALANCE, December 31,
  2002                        $ 89       $ 28,050    $ 58,772    $(17,970)   $ (1,271)        $ 67,670
                              ====       ========    ========    ========    ========         ========

        The accompanying notes are an integral part of these statements.

</TABLE>


<PAGE>

<TABLE>


                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<CAPTION>

                                                                              Years Ended December 31
                                                                          ---------------------------------
                                                                           2002         2001         2000
                                                                           ----         ----         ----
<S>                                                                       <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income .........................................................   $ 11,411    $  9,545    $  8,305
                                                                          --------    --------    --------
   Adjustments to reconcile net income to net cash flows from operating
     activities-
       Depreciation and amortization ..................................      2,536       3,239       2,694
       Deferred income taxes ..........................................        545         825         884
       Loss (gain) on disposal of property, plant and equipment .......        148        --           (24)
       Changes in assets and liabilities-
         Trade accounts receivable ....................................       (105)        663      (2,329)
         Inventories ..................................................       (778)        (56)     (1,098)
         Other current assets .........................................       (510)       (293)        887
         Other assets .................................................        671         514        (113)
         Accounts payable and accrued liabilities .....................      2,340        (295)     (1,507)
                                                                          --------    --------    --------
                  Total adjustments ...................................      4,847       4,597        (606)
                                                                          --------    --------    --------
           Net cash flows from operating activities ...................     16,258      14,142       7,699
                                                                          --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Recoveries (payments) for acquisitions, net of cash acquired .......        431      (9,298)     (7,088)
   Purchases of property, plant and equipment .........................     (2,660)     (6,983)     (2,176)
   Other investing activities .........................................       --          --          (464)
                                                                          --------    --------    --------
           Net cash flows from investing activities ...................     (2,229)    (16,281)     (9,728)
                                                                          --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on long-term debt .........................................    (57,028)    (23,561)     (9,668)
   Borrowings on long-term debt .......................................     44,348      39,953       9,191
   Proceeds from stock options exercised ..............................        832         746          99
   Purchases of treasury stock ........................................     (1,709)    (14,917)       (104)
                                                                          --------    --------    --------
           Net cash flows from financing activities ...................    (13,557)      2,221        (482)
                                                                          --------    --------    --------
Net increase (decrease) in cash and cash equivalents ..................        472          82      (2,511)
Cash and cash equivalents, beginning of period ........................         82        --         2,511
                                                                          --------    --------    --------
Cash and cash equivalents, end of period ..............................   $    554    $     82    $    ---
                                                                          ========    ========    ========

        The accompanying notes are an integral part of these statements.

</TABLE>


<PAGE>


                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1.  ORGANIZATION:

Young Innovations, Inc. and subsidiaries (the "Company") develops,  manufactures
and markets supplies and equipment used by dentists,  dental hygienists,  dental
assistants and consumers. The Company's product offering includes disposable and
metal prophy angles, prophy cups and brushes, panoramic X-ray machines, moisture
control products,  infection control  products,  dental handpieces  (drills) and
related  components,  orthodontic  toothbrushes,  flavored  examination  gloves,
children's toothbrushes, and children's toothpastes. The Company's manufacturing
and  distribution  facilities  are  located in  Missouri,  California,  Indiana,
Colorado,  Tennessee  and  Texas.  Export  sales were less than 10% of total net
sales for 2002, 2001 and 2000.

On March 12, 2002, the Board of Directors  declared a three-for-two  stock split
of the Company's  Common Stock in the form of a stock dividend  payable on March
28,  2002 to  shareholders  of record as of the close of  business  on March 22,
2002.  All share and per share  numbers in this Report give effect to such stock
split.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Young Innovations,
Inc. formed in July 1995 and its direct and indirect wholly owned  subsidiaries.
All  significant  intercompany  accounts  and  transactions  are  eliminated  in
consolidation.

USE OF ESTIMATES

The  preparation  of the  financial  statements in  conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities, disclosures of contingent assets and liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reported period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents  include all highly liquid investments with an initial
maturity of three months or less.

INVENTORIES

Inventories are stated at the lower of cost (which includes material,  labor and
manufacturing overhead) or market. Cost is determined by the first-in, first-out
(FIFO) method.

PROPERTY, PLANT AND EQUIPMENT

Property,  plant and equipment are stated at cost.  Expenditures for repairs and
maintenance are charged to expense as incurred,  and additions and  improvements
that significantly extend the lives of assets are capitalized. Upon disposition,
cost and accumulated  depreciation  are eliminated from the related accounts and
any gain or loss is reflected in the statements of income.  The Company provides
depreciation  using the straight-line  method over the estimated useful lives of
respective classes of assets as follows:

      Buildings and improvements..............................3 to 40 years
      Machinery and equipment.................................3 to 10 years


<PAGE>

      Equipment rented to others..............................4 to 15 years

OTHER ASSETS

On May 17,  1999,  the Company  acquired a one-third  interest in  International
Assembly, Inc., a Texas corporation (IAI). The Company paid approximately $1,050
in cash for this  investment.  The  investment is being  accounted for under the
equity  method  of  accounting.   Equity  income  (loss)  is  recorded  using  a
three-month  lag. The Company's  losses  attributed to IAI are included in other
expense,  net and  totaled  $150,  $240,  and $203  for  2002,  2001  and  2000,
respectively.  The asset  balance at December  31, 2002 for this  investment  is
$377, of which approximately $350 represents goodwill.

The Company  purchases  certain  services from IAI at amounts less than would be
paid to unrelated  parties.  These services totaled $458, $830 and $632 in 2002,
2001 and 2000, respectively.

INTANGIBLE ASSETS

Intangible  assets primarily  consist of costs related to trademarks and patents
issued to the Company and patent  applications.  Trademarks have been determined
to have indefinite  useful lives and therefore the carrying value is reviewed at
least annually for  recoverability.  Capitalized patent costs are amortized on a
straight-line basis over the estimated useful lives of the patents, generally 17
years. In addition, intangible assets include supplier relationships and product
formulas,  which are amortized on a  straight-line  basis over their  respective
estimated useful lives.

LONG-LIVED ASSETS

If facts and circumstances suggest that a long-lived asset may be impaired,  the
carrying value is reviewed.  If this review indicates that the carrying value of
the asset will not be recovered,  as determined based on projected  undiscounted
cash flows related to the asset over its remaining  life,  the carrying value of
the asset is reduced to its estimated fair value.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments consist principally of cash, accounts receivable, accounts
payable and debt.  The estimated  fair value of these  instruments  approximates
their carrying value.


REVENUE RECOGNITION

Revenue  from  the sale of  products  is  recorded  at the  time  title  passes,
generally  when the products are shipped as our shipping  terms are  customarily
FOB shipping point. Revenue from the rental of equipment to others is recognized
on a  month-to-month  basis as the  revenue is  earned.  The  Company  generally
warrants its products  against  defects and its most generous  policy provides a
two-year parts and labor warranty on X-ray machines.  The policy with respect to
sales returns generally provides that a customer may not return inventory except
at the  Company's  option with the  exception  of X-ray  machines,  which have a
90-day  return   policy.   The  Company  owns  X-ray   equipment   rented  on  a
month-to-month  basis to  customers.  A liability  for the removal  costs of the
rented X-ray machines is capitalized  and amortized over four years. A liability
for the removal costs of the purchased X-ray machines expected to be returned to
the Company is included in accounts payable and accrued  liabilities at December
31, 2002 and 2001.

ADVERTISING COSTS

Advertising   costs  are  expensed  when   incurred.   Advertising   costs  were
approximately $2,072, $1,834 and $1,667 for 2002, 2001 and 2000, respectively.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed when incurred and totaled $596, $516
and $602 for 2002, 2001 and 2000, respectively.


<PAGE>

INTEREST EXPENSE (INCOME), NET

Interest  expense (income)  includes  interest paid related to borrowings on the
Company's  credit  facility,  as well as  offsetting  interest  income earned on
various  investments.  In 2002, 2001 and 2000, interest income totaled $63, $96,
and $119, respectively.

OTHER EXPENSE (INCOME), NET

Other  expense  (income)  includes  the  Company's  portion  of losses  from its
investment in IAI,  rental income from leased  space,  sale of scrap,  and other
miscellaneous income and expense items, all of which are not directly related to
the Company's primary business.

INCOME TAXES

The  Company  has  accounted  for income  taxes under SFAS No. 109, an asset and
liability approach to accounting and reporting for income taxes. Deferred income
taxes are provided for temporary  differences  between the  financial  statement
carrying amounts and the tax bases of existing assets and liabilities.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash flows from operating activities include $5,401,  $4,611, and $4,020 for the
payment  of  federal  and state  income  taxes and $376,  $188,  and $99 for the
payment of interest during 2002, 2001 and 2000, respectively.

3.  ACQUISITIONS:

On June 12,  2001 the  Company  acquired  substantially  all of the  assets  and
assumed a portion of the  liabilities of the Biotrol and Challenge  subsidiaries
of Pro-Dex, Inc. (collectively "Biotrol"). The Company paid approximately $9,343
in cash including  transaction costs, with money set aside in escrow pending the
settlement of any indemnification  claims.  Upon final settlement,  the purchase
price was $8,867.  The acquisition was financed with borrowings on the Company's
credit  facility  and  cash  generated  from  operations.  The  acquisition  was
accounted for as a purchase transaction. Upon the finalization of the settlement
and purchase  accounting  during the second  quarter of 2002, the final purchase
price  allocation  was completed and goodwill was  determined to be $6,160.  The
final purchase  accounting  adjustments  included a write-off of $11 to accounts
receivable, a write-off of $184 to fixed assets, a write-off of $75 to inventory
and an increase to accrued  liabilities of $261 with the offset to goodwill.  In
accordance with SFAS 142, $2,060 of separately  identifiable  intangible assets,
including trademarks,  product formulations,  and supplier  relationships,  were
also recorded. The trademarks have been determined to have indefinite lives. The
remaining  intangible  assets are being  amortized over a period between 5 years
and 40 years.  The  results  of  operations  for  Biotrol  are  included  in the
consolidated financial statements since June 12, 2001.

On June 13,  2000 the  Company  acquired  substantially  all of the  assets  and
assumed a portion of the liabilities of Plak Smacker. The Company paid $7,053 in
cash. The acquisition was principally  financed with borrowings on the Company's
credit  facility  and  cash  generated  from  operations.  The  acquisition  was
accounted for as a purchase transaction.  The purchase price was allocated based
upon estimates of fair value of assets and liabilities, resulting in goodwill of
$6,126.  The  results  of  operations  for  Plak  Smacker  are  included  in the
consolidated financial statements since June 13, 2000.

4.  SEGMENT INFORMATION:

Segment  information has been prepared in accordance with Statement of Financial
Accounting  Standards  (SFAS)  No.  131,   "Disclosures  about  Segments  of  an
Enterprise  and Related  Information."  In 2000,  with the  acquisition  of Plak
Smacker,  the  Company has two  operating  segments  according  to SFAS No. 131:
professional and retail.  The  professional  segment sells products to dentists,
dental  hygienists and dental  assistants.  The retail segment sells products to
consumers  through mass  merchandisers.  There are no  significant  determinable
assets or interest costs for the retail segment.


<PAGE>

The table below is a summary of certain  financial  information  relating to the
two segments:

<TABLE>

        2002                                    Professional    Retail      Consolidated
                                                ------------    ------      ------------

        <S>                                        <C>           <C>           <C>
        Net sales.............................     $ 67,147      $ 5,071       $ 72,218
        Income from operations................     $ 18,560       $ 438        $ 18,998

        2001                                    Professional    Retail      Consolidated
                                                ------------    ------      ------------

        Net sales.............................     $58,824       $ 4,835       $ 63,659
        Income from operations................     $15,484        $ 261        $ 15,745

        2000                                    Professional     Retail     Consolidated
                                                -------------    -------    ------------

        Net sales.............................     $48,737      $ 2,650        $51,387
        Income from operations................     $13,428       $ 205         $13,633
                                                   -------       ------        -------

</TABLE>

5.  MAJOR CUSTOMERS AND CREDIT CONCENTRATION:

The  Company  generates  trade  accounts  receivable  in the  normal  course  of
business. The Company grants credit to distributors and customers throughout the
world  and  generally  does  not  require  collateral  to  secure  the  accounts
receivable.  The Company's  credit risk is concentrated  among two  distributors
accounting for 42% and 35% of accounts receivable at December 31, 2002 and 2001,
respectively.

The percentage of net sales to major  distributors to total net sales consist of
the following:

                                                               Years Ended
                                                               December 31
                                                       -------------------------
                     Distributor                         2002    2001    2000
                     -----------                         ----    ----    ----

          Henry Schein, Inc..........................   13.8%   14.6%   17.0%
          Patterson Dental Company...................   15.0    13.3    11.7

6.  INVENTORIES:

Inventories consist of the following:
                                                            December 31
                                                        ---------------------
                                                          2002       2001
                                                          ----       ----

         Finished products...........................     $ 4,931    $ 3,340
         Work in process.............................       1,321      2,030
         Raw materials and supplies..................       1,609      1,788
                                                         --------   --------
                    Total inventories                     $ 7,861    $ 7,158
                                                          =======    =======



<PAGE>



7.  PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment consist of the following:

<TABLE>

                                                                        December 31
                                                                   -----------------------
                                                                      2002        2001
                                                                      ----        ----

         <S>                                                       <C>         <C>
         Land....................................................  $    1,086  $    1,086
         Buildings and improvements..............................       7,474       7,448
         Machinery and equipment.................................      17,250      15,350
         Equipment rented to others..............................       5,852       5,257
         Construction in progress................................         129         605
                                                                    ---------   ---------
                                                                       31,791      29,746

         Less - Accumulated depreciation.........................     (12,829)    (10,987)
                                                                    ---------- ----------
                    Total property, plant and equipment, net.....  $   18,962  $   18,759
                                                                    =========   =========

</TABLE>

Machinery and equipment under capital lease and related accumulated depreciation
was $345 and $218,  respectively  at  December  31,  2002 and was $794 and $356,
respectively at December 31, 2001.  Depreciation expense was $2,125,  $1,922 and
$1,693 for 2002, 2001 and 2000, respectively.

8.  OTHER ASSETS:

Other assets consist of the following:

<TABLE>

                                                                       December 31
                                                                     -----------------
                                                                      2002     2001
                                                                      ----     ----

         <S>                                                          <C>      <C>
         Investment in IAI.......................................     $  377   $  527
         Notes receivable, long-term (see footnote 19)...........          -      500
         Other...................................................        103      124
                                                                     -------  -------
                    Total other assets...........................     $  480   $1,151
                                                                      ======   ======

</TABLE>

9.  GOODWILL AND OTHER INTANGIBLE ASSETS:

Goodwill consists of the following:

<TABLE>

                                                                       December 31
                                                                  ---------------------
                                                                     2002        2001
                                                                     ----        ----

         <S>                                                       <C>         <C>
         Goodwill................................................  $ 47,212    $ 49,182
         Less-  Accumulated amortization.........................    (4,798)     (4,798)
                                                                   --------- ----------
                    Total goodwill...............................  $ 42,414    $ 44,384
                                                                   ========    ========

</TABLE>

Amortization of goodwill  totaled $0, $1,243 and $1,001 for 2002, 2001 and 2000,
respectively.

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 142,  Goodwill  and Other  Intangible  Assets  ("SFAS  142").  In
accordance  with  SFAS  142,  the  Company  no  longer  amortizes  goodwill  and
intangibles  which have indefinite  lives.  Other intangible  assets with finite
lives continue to be amortized over their useful lives.

SFAS 142 also requires that the Company  assess  goodwill and  intangibles  with
indefinite  lives for impairment at least  annually,  based on the fair value of
the related reporting unit or intangible asset. The impairment test for goodwill
is a two-step process.  The first step is to identify when a goodwill impairment
has occurred by comparing  the fair value of a reporting  unit with its carrying



<PAGE>

amount,  including  goodwill.  If the fair value of a reporting unit exceeds its
carrying amount,  goodwill of the reporting unit is not considered impaired.  If
the carrying  amount of the  reporting  unit exceeds its fair value,  the second
step of the  goodwill  test  should be  performed  to measure  the amount of the
impairment  loss,  if any. In this second  step,  the implied  fair value of the
reporting  unit's goodwill is compared with the carrying amount of the goodwill.
If the carrying amount of the reporting unit's goodwill exceeds the implied fair
value of that goodwill,  an impairment  loss should be recognized  equivalent to
the excess amount which in no circumstances should exceed the carrying amount of
the goodwill.

In accordance with the transition  rules of SFAS 142, the Company  performed the
transitional  impairment  tests during the first half of 2002,  as of January 1,
2002.  Reporting units were established based on the Company's current reporting
structure.  All existing  goodwill and  intangible  assets were  assigned to the
reporting units. All of the goodwill was allocated to the reporting units within
the  professional  segment.  The Company  engaged an  independent  valuation and
appraisal  firm to assist with  determining  fair values  based upon  discounted
future estimated cash flows and other valuation  techniques.  Fair values of the
reporting units exceeded their  respective  book values.  Thus no impairment was
identified  as of January 1, 2002,  and,  therefore,  Step 2 testing  was deemed
unnecessary.  During the fourth quarter of 2002, the Company carried forward the
detailed  determination  of the fair value of the reporting  units, as permitted
based on certain criteria of SFAS 142. The Company  determined that there was no
impairment of reporting  units. On an on-going  basis,  the Company will perform
its annual impairment assessment in the fourth quarter of each year.


With the finalization of the purchase  accounting relating to the acquisition of
Biotrol  (acquired  June 12,  2001),  intangible  assets other than  goodwill of
$2,060 were  identified in  accordance  with  Statement of Financial  Accounting
Standards No. 141, Business  Combinations.  This as well as other purchase price
adjustments and finalization of the purchase  accounting resulted in a reduction
in the net  carrying  value of goodwill  from  $44,384 at  December  31, 2001 to
$42,414 at December 31, 2002.  There have been no changes in goodwill related to
impairment losses or write-offs due to sale of businesses.

Other  intangibles  consist  of the  following,  which are all  included  in the
Professional Segment:

<TABLE>

                                                            AS OF DECEMBER 31, 2002
                                         ---------------------------------------------------------------
                                           GROSS CARRYING        ACCUMULATED       NET CARRYING AMOUNT
                                               AMOUNT            AMORTIZATION
     <S>                                       <C>                  <C>                  <C>
     Amortized intangible assets
          Patents                              $    491             $ 204                $   287
          Product formulas                          430                16                    414
          Supplier relationships                    130                39                     91
                                         ----------------       -----------              ---------
               Total                           $  1,051             $ 259                $   792

     Unamortized intangible assets
          Trademarks                           $  1,510                                  $ 1,510
                                         --------------                                  -------
               Total                           $  1,510                                  $ 1,510
                                         --------------                                  -------
               Total intangible assets         $  2,561             $ 259                $ 2,302


                                                            AS OF DECEMBER 31, 2001
                                         ---------------------------------------------------------------
                                           GROSS CARRYING        ACCUMULATED       NET CARRYING AMOUNT
                                               AMOUNT            AMORTIZATION
     Amortized intangible assets
          Patents                             $     485             $ 178                $  307

</TABLE>

The costs of other intangible  assets with finite lives are amortized over their
expected useful lives using the straight-line method. The amortization lives are
as follows: 18 to 20 years for patents, 40 years for product  formulations and 5
years for  supplier  relationships.  The weighted  average life for  amortizable
intangible  assets is 26 years.  Aggregate  amortization  expense for the twelve
months  ended  December  31,  2002,   2001  and  2000  was  $81,  $26  and  $26,
respectively.  Estimated amortization expense for each of the next five years is

<PAGE>

as follows:

         For the year ended 12/31/03                 $   62
         For the year ended 12/31/04                     62
         For the year ended 12/31/05                     62
         For the year ended 12/31/06                     49
         For the year ended 12/31/07                     36

SFAS No. 142 does not require retroactive restatement for all periods presented.
However,  presented below is a reconciliation of the 2001 and 2000 statements of
income data previously reported to reflect the impact related to its adoption:

<TABLE>

                                                              TWELVE MONTHS ENDED
                                          ----------------------------------------------------------
                                          DECEMBER 31, 2002   DECEMBER 31, 2001   DECEMBER 31, 2000
                                          -----------------   -----------------   -----------------

<S>                                            <C>                 <C>                 <C>
Reported net income                            $11,411             $ 9,545             $8,305
Add:  amortization adjustment, net of                -                 904                791
                                          ------------             --------            ------
related tax
Adjusted net income                            $11,411             $10,449             $9,096
                                               =======             =======             ======

Reported basic earnings per share                $1.29               $0.99               $0.85
Add:  amortization adjustment                        -               $.09                $.08
                                          ------------             --------            ------
rAdjusted basic earnings per share               $1.29               $1.08               $.93
                                                =====               =====               ====

Reported diluted earnings per share              $1.22               $0.96               $0.84
Add:  amortization adjustment                        -               $.09                $.08
                                          ------------             --------            ------
rAdjusted diluted earnings per share             $1.22               $1.05               $.92
                                                 =====               =====               ====


</TABLE>

10.  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES CONSIST OF THE FOLLOWING:

<TABLE>

                                                                                         December 31
                                                                                     ---------------------
                                                                                       2002       2001

         <S>                                                                           <C>       <C>
         Accounts payable.......................................................       $ 3,471   $  2,045
         Accrued salaries and bonuses...........................................         1,465      1,391
         Accrued expenses and other ............................................         3,174      2,988
                                                                                      --------   --------
                    Total accounts payable and accrued liabilities..............       $ 8,110    $ 6,424
                                                                                       =======    =======

</TABLE>


<PAGE>


11.  CREDIT ARRANGEMENTS AND NOTES PAYABLE:

The Company has a credit  arrangement that provides for a three-year,  unsecured
revolving  credit facility with an aggregate  commitment of $40,000.  Borrowings
under the  arrangement  bear  interest at rates  ranging from LIBOR +1% to LIBOR
+2.25% or Prime to Prime +.5%.  Commitment fees for this arrangement  range from
..15% to .25% of the unused  balance.  The  agreement is  unsecured  and contains
various financial and other covenants.

Long-term debt was as follows:

<TABLE>

                                                                                    DECEMBER 31,       DECEMBER 31,
                                                                                        2002               2001
                                                                                        ----               ----
    <S>                                                                                   <C>             <C>
    Revolving credit facility due 2004 with a weighted-average interest
    rate of 2.73% at December 31, 2002 and 2.98% at December 31, 2001                     $ 4,161         $  16,700
    Capital Lease Obligations                                                                 143               284
                                                                                     ------------      ------------
                                                                                            4,304            16,984

    Less- current portion                                                                      75               141
                                                                                     ------------      ------------
                                                                                          $ 4,229          $ 16,843
                                                                                     ============      ============

</TABLE>

Future  maturities of the credit  facility and capital lease  obligations are as
follows:

                2003....................................    $      75
                2004....................................        4,229
                                                            ---------
                Total...................................    $   4,304

In certain circumstances,  the Company provides recourse for loans for equipment
purchases by customers. Certain banks require the Company to provide recourse to
finance  equipment for new dentists and other  customers  with credit  histories
which are not consistent with the banks' lending  criteria.  In the event that a
bank  requires  recourse on a given loan,  the Company  would  assume the bank's
security  interest in the equipment  securing the loan. As of December 31, 2002,
approximately $649 of the equipment financed with various lenders was subject to
such  recourse.  Recourse on a given loan is  generally  eliminated  by the bank
after one year,  provided  the bank has received  timely  payments on that loan.
Based on the Company's past experience with respect to these  arrangements,  the
carrying amount of this obligation at December 31, 2002 was zero.

12.  COMMON STOCK:

During 2002, the Company  repurchased 81 shares of its common stock from various
stockholders for $1,709.  The purchases were financed through  borrowings on the
Company's  credit  facility.  The Company also reissued 187 shares of its Common
Stock in  conjunction  with stock option  exercises for $832.  In addition,  the
Company  issued 24 shares of Common  Stock for  restricted  stock  which  vested
during 2002 (see footnote 13).

During  2001,  the  Company  repurchased  1,052  shares of its Common  Stock for
$14,917.  1,050 of  these  shares  were  purchased  from  George  Richmond,  the
Company's  Chairman  (see  footnote 19). The Company also reissued 119 shares of
its Common Stock in conjunction with stock option exercises for $746.

On March 12, 2002, the Board of Directors  declared a three-for-two  stock split
of the Company's  Common Stock in the form of a stock dividend  payable on March
28,  2002 to  shareholders  of record as of the close of  business  on March 22,
2002.  All share and per share  numbers in this Report give effect to such stock
split.

13.  STOCK AWARDS:

STOCK OPTIONS


<PAGE>

The Company  adopted the 1997 Stock Option Plan (the Plan) effective in November
1997 and  amended the Plan in 1999 and 2001.  A total of 1,725  shares of Common
Stock are  reserved for issuance  under this plan which is  administered  by the
compensation  committee  of the  Board of  Directors  (Compensation  Committee).
Participants in the Plan will be those employees whom the Compensation Committee
may select from time to time and those  nonemployee  directors as the  Company's
Board of Directors may select from time to time. As of December 31, 2002,  1,422
options had been granted.

A summary of the options outstanding and exercisable is as follows:

<TABLE>
                                                                                                 Weighted
                                                                                Range of         Average
                                                                                Exercise         Exercise
                                                                  Shares         Prices            Price
                                                                  ------     --------------       ------

          <S>                                                       <C>      <C>                  <C>
          Outstanding, January 1, 2000.....................         788      $8.00 - $11.67       $9.05
          Granted..........................................           -            -                -
          Exercised........................................          12      $8.00 - $10.00       $8.51
          Forfeited........................................           7      $8.00 - $10.00       $8.81
                                                                  -----
          Outstanding, December 31, 2000...................         769      $8.00 - $11.67       $9.07
                                                                  =====
          Exercisable at December 31, 2000.................         438      $8.00 - $11.67       $8.99
                                                                  =====

          Outstanding, January 1, 2001.....................         769      $8.00 - $11.67       $9.07
          Granted..........................................         488          $14.02           $14.02
          Exercised........................................         119      $8.00 - $11.33       $8.58
          Forfeited........................................          48      $8.00 - $11.33       $9.56
                                                                  -----
          Outstanding, December 31, 2001...................       1,090      $8.00 - $14.02       $11.31
                                                                  =====
          Exercisable at December 31, 2001.................         483      $8.00 - $11.67       $9.08
                                                                  =====

          Outstanding, January 1, 2002.....................       1,090      $8.00 - $14.02       $11.31
          Granted..........................................           -            -                -
          Exercised........................................         187      $8.00 - $11.33       $9.19
          Forfeited........................................           7      $8.00 - $9.29        $9.26
          Outstanding, December 31, 2002...................         896      $8.00 - $14.02       $11.77
                                                                    ===
          Exercisable at December 31, 2002.................         588      $8.00 - $14.02       $10.59
                                                                    ===

</TABLE>


The weighted average  remaining  contractual life of the options  outstanding at
December  31,  2002 is 7.0  years.  As of  January  1,  2003,  697  shares  were
exercisable  with a range of exercise prices from $8.00 - $14.02 with a weighted
average price of $11.12.

The  Compensation  Committee  of the  Board  of  Directors  establishes  vesting
schedules for each option issued under the Plan.  Outstanding  options generally
vest over four years. The exercise price has historically been equal to the fair
value of the Common Stock at the date of grant. All options expire 10 years from
the grant date.

In accordance with SFAS No. 123, "Accounting for Stock-Based  Compensation," the
Company  elected APB Opinion No. 25,  "Accounting for Stock Issued to Employee,"
and  related  interpretations  in  accounting  for  the  Plan.  Accordingly,  no
compensation  cost has been recognized for the Plan. Had compensation  costs for
the Plan been  determined  based upon the fair value of the options at the grant
date  consistent  with  the  methodology  prescribed  under  SFAS No.  123,  the
Company's  net income and  earnings  per share would  approximate  the pro forma
amounts below:


<PAGE>


<TABLE>


                                          Year Ended                       Year Ended                    Year Ended
                                       December 31, 2002               December 31, 2001             December 31, 2000
                                 ------------------------------    ---------------------------    -------------------------
                                       As             Pro              As            Pro              As           Pro
                                    Reported         Forma          Reported        Forma          Reported       Forma
                                    --------         -----          --------        -----          --------       -----
                                           Unaudited                       Unaudited                     Unaudited
   <S>                              <C>             <C>            <C>            <C>              <C>           <C>
   Net income..................     $11,411         $10,265        $9,545         $ 8,630          $8,305        $ 7,556
   Earnings per share:
     Basic.....................     $  1.29           $1.16        $  0.99        $  0.89          $ 0.85        $  0.77
     Diluted...................     $  1.22           $1.10        $  0.96        $  0.87          $ 0.84        $  0.76

</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions:  (i) dividend  yield of 0%; (ii)  expected  volatility of 43.7% for
2001;  (iii) risk free interest rate of 4.8% 2001; and (iv) expected life of 8.0
years for 2001. The weighted average fair value of the options at the grant date
was $8.49 for 2001. No options were granted in 2002 or 2000.

RESTRICTED STOCK

Under the above Plan,  restricted  stock may be awarded or sold to  participants
under  terms and  conditions  established  by the  Compensation  Committee.  For
restricted  stock  grants,  compensation  expense  is based  upon the grant date
market  price and is recorded  over the vesting  period.  In October  2001,  the
Company granted 120 shares of restricted stock to certain executive  officers of
the Company. No monetary consideration was paid by the officers who received the
restricted  stock.  These  shares vest 20% each year for five years  starting in
October  2002.  For the years  ended  December  31,  2002 and 2001,  the Company
recorded $337 and $74,  respectively,  of  compensation  expense  related to the
restricted stock grants.


14.  INCOME TAXES:

The components of the provision for income taxes are as follows:

<TABLE>

                                                                               Years Ended December 31
                                                                           --------------------------------
                                                                             2002       2001       2000
                                                                             ----       ----       ----

          <S>                                                                <C>        <C>        <C>
          Current.....................................................       $ 6,756    $ 5,149    $ 4,336
          Deferred....................................................           545        826        884
                                                                             -------    -------    -------
                     Total provision for income taxes.................       $ 7,301    $ 5,975    $ 5,220
                                                                             =======    =======    =======

</TABLE>


<PAGE>



The income tax provisions are different from the amount computed by applying the
U.S.  federal income tax rates to income before  provision for income taxes. The
reasons for these differences are as follows:

<TABLE>

                                                                               Years Ended December 31
                                                                           --------------------------------
                                                                             2002       2001       2000
                                                                             ----       ----       ----

          <S>                                                               <C>        <C>        <C>
          Income before provision for income taxes....................      $ 18,712   $ 15,520   $ 13,525
          U.S. federal income tax rate................................           35%         35%       34%
                                                                            --------   --------   --------
                     Computed income taxes............................         6,549      5,432      4,599
          Goodwill amortization.......................................             -        143        135
          Other.......................................................           211        (59)       69
                                                                           ---------- --------------------
                     Provision for federal income taxes...............         6,760      5,516      4,803
          State income taxes, net of federal tax benefit..............           541        459        417
                                                                           ---------  ---------  ---------
                     Provision for income taxes.......................       $ 7,301    $ 5,975    $ 5,220
                                                                           =========  =========  =========
          Effective tax rate..........................................         39.0%      38.5%      38.6%
                                                                           =========  =========  =========

</TABLE>

Temporary  differences  that  gave  rise  to  deferred  income  tax  assets  and
liabilities are as follows:


<TABLE>

                                                                                         December 31
                                                                                     ---------------------
                                                                                       2002       2001
                                                                                       ----       ----
         <S>                                                                           <C>       <C>
         Deferred income tax assets:
           Trade accounts receivable............................................       $   145   $     77
           Inventories..........................................................           190        100
           Accrued liabilities..................................................           736        847
           Other................................................................            29          -
                                                                                       --------  --------
                    Total deferred income tax assets............................         1,100      1,024
                                                                                       --------  --------
         Deferred income tax liabilities:
           Property, plant and equipment........................................        (2,530)    (1,937)
           Intangibles..........................................................        (2,403)    (1,648)
           Other................................................................             -       (727)
                                                                                       --------  --------
                    Total deferred income tax liabilities.......................        (4,933)    (4,312)
                                                                                       --------  --------
         Net deferred income tax liability......................................       $(3,833)   $(3,288)
                                                                                       ========   =======

</TABLE>

Current  deferred  income tax assets of $1,071 and $1,024 are  included in other
current assets as of December 31, 2002 and 2001, respectively.

15.  SALES OF EQUIPMENT RENTED TO OTHERS:

Periodically,  customers  who rent X-ray  equipment  from the  Company  elect to
purchase the equipment.  The Company recognizes revenue for the proceeds of such
sales and records as cost of goods sold the net book value of the equipment. Net
sales of equipment consistent with this practice were $1,111, $1,014, and $1,434
for 2002,  2001 and 2000,  respectively  and gross  profit  from these sales was
$522, $555, and $712 for 2002, 2001 and 2000, respectively.

16.  EMPLOYEE BENEFITS:

The Company has a defined  contribution  401(k) plan covering  substantially all
full-time  employees meeting service and age requirements.  Contributions to the
Plan can be made by an  employee  through  deferred  compensation  and through a
discretionary employer  contribution.  Compensation expense related to this plan
was $307, $258, and $234 for 2002, 2001 and 2000, respectively. The Company also
offers certain healthcare insurance benefits for substantially all employees.


<PAGE>


17.  RELATED-PARTY TRANSACTIONS:

In October 2002, the Company purchased 8 shares of its common stock from certain
executive  officers for approximately $187 in order to remit tax withholdings on
their vested restricted stock.

During 2002, the Company paid consulting  fees of $75 to a corporation  which is
wholly owned by a principal stockholder of the Company.

In November  2001, the Company  purchased  1,050 shares of its common stock from
George  E.  Richmond,  its  Chairman  and  then  Chief  Executive  Officer,  for
approximately $14,900.

The Company  sells  products to, and pays for services  from, a  corporation  in
which a principal  stockholder of the Company has an equity interest.  Net sales
to  such  corporation  totaled  $83,  $70,  and  $77 in  2002,  2001  and  2000,
respectively. Amounts paid for services totaled $1, $2, and $3 in 2002, 2001 and
2000, respectively.

In August  2000,  the Company  loaned an officer of the Company $500 in exchange
for a three-year  unsecured promissory note at an interest rate of 6.27% payable
annually.  The note is included in other current  assets on the balance sheet at
December 31, 2002 and in other assets on the balance sheet at December 31, 2001.
Interest income of $31 related to this note was recorded in 2002 and in 2001.

18.  EARNINGS PER SHARE:

Basic  earnings  per share (Basic EPS) is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted  earnings per share  (Diluted EPS) include the dilutive  effect of stock
options and  restricted  stock,  if any,  using the treasury  stock method.  The
following  table sets forth the  computation  of basic and diluted  earnings per
share:

<TABLE>

                                                                          Years Ended December 31
                                                                -------------------------------------------
                                                                  2002              2001             2000
                                                                  ----              ----             ----

   <S>                                                          <C>               <C>               <C>
   Net income.......................................            $11,411           $9,545            $8,305
   Weighted average shares outstanding for basic earnings
   per share........................................              8,876            9,662             9,752
   Dilutive effect of stock options and restricted
   stock............................................                455              242               162
   Weighted average shares outstanding for diluted
   earnings per share...............................              9,331            9,904             9,914
   Basic earnings per share.........................             $ 1.29          $   .99           $   .85
   Diluted earnings per share.......................             $ 1.22          $   .96           $   .84
-----------------------------------------------------------------------------------------------------------


</TABLE>

<PAGE>




19. QUARTERLY FINANCIAL DATA (UNAUDITED):

<TABLE>

                                                             1ST QTR.   2ND QTR.    3RD QTR.    4TH QTR.      YEAR
                                                             --------   --------    --------    --------      ----

2002
----
<S>                                                           <C>        <C>         <C>         <C>        <C>
Net sales..............................................       $16,513    $17,935     $18,086     $19,684    $72,218
Gross profit...........................................         8,976      9,639       9,476      10,340     38,431
Net income.............................................         2,430      2,858       2,844       3,279     11,411
Earnings per share - basic.............................          $.28       $.32        $.32        $.37      $1.29
Earnings per share - diluted...........................          $.27       $.30        $.30        $.35      $1.22

2001
----
Net sales..............................................       $13,929    $15,022     $16,760     $17,948    $63,659
Gross profit...........................................         7,113      7,935       8,895       9,699     33,642
Net income.............................................         1,966      2,269       2,425       2,885      9,545
Earnings per share - basic.............................          $.20       $.23        $.25        $.31       $.99
Earnings per share - diluted...........................          $.20       $.23        $.24        $.30       $.96


</TABLE>

20.  COMMITMENTS AND CONTINGENCIES:

The  Company  leases  certain  office,   warehouse,   manufacturing  facilities,
automobiles,  and equipment under  non-cancelable  operating  leases.  The total
rental expense for all operating  leases was $812, $636, and $324 for 2002, 2001
and 2000,  respectively.  Rental  commitments amount to: $615 for 2003, $197 for
2004, $78 for 2005, $13 for 2006, and $12 for 2007.

On May 24, 2001,  Sultan Dental Products,  Ltd.  ("Sultan") filed a complaint in
the United States  District  Court for the Southern  District of New York (which
was  subsequently  dismissed by the  plaintiff  and refiled in the United States
District  Court for the  District of New Jersey on October 16,  2001)  asserting
that the Young  disposable  prophy angle  infringes a patent that is exclusively
licensed to Sultan. The complaint sought a permanent  injunction and unspecified
damages. In addition,  on January 25, 2002, the Company filed a complaint in the
United States District Court for the Eastern District of Missouri asserting that
the  manufacture of the Sultan  disposable  prophy angle infringes the Company's
U.S.  Patent No.  5,749,728.  The complaint  sought a permanent  injunction  and
damages.  On February 6, 2003,  the  Company and Sultan  settled  each case with
neither party paying a material amount.

The Company and its  subsidiaries  from time to time are also parties to various
legal proceedings arising in the normal course of business.  Management believes
that none of these proceedings,  if determined adversely,  would have a material
adverse  effect on the Company's  financial  position,  results of operations or
liquidity.

21.  NEW ACCOUNTING STANDARDS

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 143,
"Accounting  for Asset  Retirement  Obligations."  Under SFAS No. 143,  the fair
value of a  liability  for an asset  retirement  obligation  is  required  to be
recognized  in the period in which it is  incurred if a  reasonable  estimate of
fair value can be made. The associated asset retirement costs are capitalized as
part  of  the  carrying  amount  of the  long-lived  asset.  SFAS  No.  143  was
implemented by the Company beginning  January 1, 2002.  Adoption of SFAS No. 143
did not have a material impact on the consolidated  financial  statements of the
Company.

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets." SFAS No. 144
addresses  financial  accounting  and reporting for the impairment of long-lived
assets and for the long-lived  assets to be disposed of and supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed of." SFAS No. 144  establishes a single  accounting  model
for  long-lived  assets to be  disposed of by sale and  resolves  implementation
issues  related to SFAS No.  121.  SFAS No. 144 was  implemented  by the Company
beginning  January  1,  2002.  Adoption  of SFAS No. 144 did not have a material
impact on the consolidated financial statements of the Company.


<PAGE>

In April 2002,  the Financial  Accounting  Standards  Board issued SFAS No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment to FASB Statement No.
13,  and  Technical  Corrections."  SFAS No.  145  addresses  classification  of
extinguishment  of debt and requires  accounting for lease  modifications in the
same manner as  sale-leaseback  transactions.  This  Statement also amends other
existing  authoritative  pronouncements to make various  technical  corrections,
clarify meanings, or describe their applicability under changed conditions. SFAS
No. 145 was implemented by the Company  beginning  January 1, 2002.  Adoption of
SFAS No.  145 did not  have a  material  impact  on the  consolidated  financial
statements of the Company.

In June 2002,  the  Financial  Accounting  Standards  Board issued SFAS No. 146,
"Accounting for Costs Associated with Exit or Disposal  Activities."  Under SFAS
No. 146,  liabilities  are  recognized  for exit and disposal  costs only when a
liability is incurred,  rather than at the date of an entity's  commitment to an
exit plan. SFAS No. 146 is effective for exit or disposal  activities  initiated
after December 31, 2002. Adoption of SFAS No. 146 did not have a material impact
on the consolidated financial statements of the Company.

In December 2002, the Financial  Accounting  Standards Board issued SFAS No.148,
"Accounting for Stock-Based  Compensation  -- Transition and  Disclosure."  This
statement  amends SFAS No. 123,  "Accounting for Stock-Based  Compensation",  to
provide  alternative  methods of transition  for a voluntary  change to the fair
value based method of  accounting  for  stock-based  employee  compensation.  In
addition,  this statement amends the disclosure  requirements of SFAS No. 123 to
require prominent  disclosures in both annual and interim  financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect  of the  method  used on  reported  results.  FAS No.  148  provides  for
voluntary  adoption of the fair value  method for  entities  with  fiscal  years
ending  after  December  15,  2002.  The  Company  currently  has not made  this
election.

In  November  2002,  the  Financial   Accounting  Standards  Board  issued  FASB
Interpretation No.45,  "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees,  Including  Indirect  Guarantees  of  Indebtedness  of Other."  This
interpretation  elaborates on the  disclosures  to be made by a guarantor in its
interim and annual  financial  statements  about its  obligations  under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize,  at the  inception of a guarantee,  a liability for the fair value of
the obligation undertaken in issuing the guarantee.  The initial recognition and
initial  measurement  provisions  of this  Interpretation  are  applicable  on a
prospective  basis to  guarantees  issued or modified  after  December 31, 2002,
irrespective of the guarantor's fiscal year-end. The disclosure  requirements in
this Interpretation are effective for financial  statements of interim or annual
periods ending after December 31, 2002.  Management  does not believe the impact
of this Interpretation will be material to the consolidated financial statements
of the Company.



<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

On June  17,  2002 the  Company  filed a Form  8-K.  Under  item 4, the  Company
reported that its Board of Directors had  appointed  KPMG LLP to replace  Arthur
Andersen LLP, who the Company  dismissed on June 10, 2002 as independent  public
accountants.


<PAGE>



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a)     Information  concerning the Company's  directors called for by this item
        will be included in the Company's definitive Proxy Statement prepared in
        connection  with  the  2003  Annual  Meeting  of  Shareholders   and  is
        incorporated  herein by reference.  Such proxy  statement  will be filed
        with the  Commission  within 120 days  after the close of the  Company's
        fiscal year.
(b)     Reference is made to "Executive Officers of the Registrant" in Part I.

ITEM 11. EXECUTIVE COMPENSATION.

Information  concerning this item will be included under the captions "Executive
Compensation"  and "Option Grants" in the Company's  definitive  Proxy Statement
prepared in  connection  with the 2003  Annual  Meeting of  Shareholders  and is
incorporated  herein by reference.  Such proxy  statement will be filed with the
Commission within 120 days after the close of the Company's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information  concerning this item will be included under the caption "Securities
Beneficially  Owned  by  Management  and  Principal  Shareholders"  and  "Equity
Compensation  Plan  Information"  in the Company's  definitive  Proxy  Statement
prepared in  connection  with the 2003  Annual  Meeting of  Shareholders  and is
incorporated  herein by reference.  Such proxy  statement will be filed with the
Commission within 120 days after the close of the Company's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information  concerning  this item will be included  under the caption  "Certain
Relationships and Related Party Transactions" in the Company's  definitive Proxy
Statement  prepared in connection  with the 2003 Annual Meeting of  Shareholders
and is incorporated herein by reference. Such proxy statement will be filed with
the Commission within 120 days after the close of the Company's fiscal year.

ITEM 14. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have concluded, based on
their  evaluation  within  90  days  of the  filing  of this  report,  that  our
disclosure  controls and  procedures  are  effective to ensure that  information
required  to be  disclosed  in the  reports  that we file or  submit  under  the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time periods  specified in the Securities  and Exchange  Commission's
rules and forms. There have been no significant changes in our internal controls
or in other factors that could significantly affect these controls subsequent to
the date of the previously mentioned evaluation.


                                     PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

    (a)(1)  Financial  Statements  --  Reference  is  made  to  Item  8  hereof:
         Consolidated Balance Sheets - December 31, 2002 and 2001
         Consolidated  Statements  of Income - Years ended  December  31,  2002,
           2001, and 2000
         Consolidated  Statements of Stockholders' Equity - Years ended December
           31, 2002, 2001, and 2000
         Consolidated Statements of Cash Flows - Years  ended  December  31,
           2002,  2001,  and  2000
         Notes to Consolidated Financial Statements - December 31, 2002

    (a)(2) Financial  Statement  Schedule -- The following  financial  statement
schedule of the Company is included for the years ended December 31, 2002, 2001,
and 2000:

                 Schedule II Valuation and Qualifying Accounts.

All other financial statement schedules are omitted for the reason that they are
not required or are not applicable,  or the required information is shown in the
financial statements or the notes thereto.

    (a)(3) Exhibits -- See the Exhibit Index for the exhibits filed as a part of
or incorporated by reference into this report.


<PAGE>

                                  EXHIBIT INDEX
                                  -------------


EXHIBIT
NUMBER            DESCRIPTION
------            -----------

3.1(a)     Articles of Incorporation of Registrant and Statement of Correction

3.2(e)     Amended and Restated By-Laws of Registrant

4.1(c)     Credit Facilities Agreement among Bank of America, N.A., the other
           lenders listed therein and the Registrant dated March 20, 2001
           (the "Credit Agreement")

4.2(c)     Amendment No. 1 to the Credit Agreement dated April 20, 2001

4.3(d)     Amendment No. 2 to the Credit Agreement dated September 28, 2001

4.4(h)     Amendment No. 3 to the Credit Agreement dated September 19, 2002

10.1(e)    Amended and Restated 1997 Stock Option Plan of the Registrant

10.2(g)    Employment Agreement dated June 12, 2002, by and between Young the
           Registrant and Alfred E. Brennan, Jr.

10.3(g)    Employment Agreement dated June 12, 2002, by and between the
           Registrant and Arthur L. Herbst, Jr.

10.4(g)    Employment  Agreement  dated  June  12,  2002,  by  and  between  the
           Registrant and Eric J. Stetzel

10.5(b)    Promissory Note dated August 7, 2000, in the amount of $500,000
           payable by Alfred E. Brennan, Jr. to the Registrant

10.6(g)    Employment  Agreement  dated  April  1,  2002,  by  and  between  the
           Registrant and George E. Richmond

10.7(b)    Consulting  Agreement  dated  January 8,  2001,  by and  between  the
           Registrant and Richard G. Richmond

10.8(e)    Amendment to Richard G. Richmond Consulting Agreement dated November
           19, 2001

10.9(e)    Stock Repurchase Agreement dated November 9, 2001, by and between the
           Registrant and George E. Richmond

10.10(e)   Form  of the  Registrant's  Restricted  Stock  Award  Agreement  with
           schedule of grantees

10.11(g)   Consulting  Agreement  dated  April  1,  2002,  by  and  between  the
           Registrant and GER Consulting, Inc.

10.12(g)   Form of  Indemnity  Agreement  entered  into with each  member of the
           Registrant's Board of Directors

10.13(i)   Amendment to George E. Richmond Employment Agreement dated May 14,
           2002

10.14(i)   Amendment to GER Consulting, Inc. Consulting Agreement dated May 14,
           2002

16(f)      Letter Regarding Change of Certifying Accountants

21(i)      Subsidiaries of the Registrant

23.1(i)    Consent of KPMG LLP

23.2(i)    Information Regarding Consent of Arthur Andersen LLP

24         Power of Attorney (included on Signature page)

<PAGE>

99.1(i)    Certification pursuant to 18.U.S.C. Section 1350 as adopted pursuant
           to Section 906 of Sarbanes-Oxley Act of 2002









--------------------------------
(a)        Filed as an Exhibit to Registrant's Registration Statement
           No. 333-34971 on Form S-1 and incorporated herein by reference.
(b)        Filed as an Exhibit to Registrant's Report on Form 10-K filed on
           March 29, 2001 and incorporated herein by reference.
(c)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           August 14, 2001 and incorporated herein by reference.
(d)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           November 13, 2001 and incorporated herein by reference.
(e)        Filed as an Exhibit to Registrant's Report on Form 10-K filed on
           March 25, 2002 and incorporated herein by reference.
(f)        Filed as an Exhibit to Registrant's Report on Form 8-K filed on June
           17, 2002 and incorporated herein by reference.
(g)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           August 14, 2002 and incorporated herein by reference.
(h)        Filed as an Exhibit to Registrant's Report on Form 10-Q/A filed on
           November 11, 2002 and incorporated herein by reference.
(i)        Filed herewith.




<PAGE>




                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: March 19, 2003

                                                 YOUNG INNOVATIONS, INC.

                                                 By:  /s/ Alfred E. Brennan, Jr.
                                                      --------------------------
                                                      Alfred E. Brennan, Jr.


Each person whose  signature  appears below  constitutes  and appoints George E.
Richmond and Alfred E. Brennan his true and lawful attorneys-in-fact and agents,
each acting alone, with full powers of substitution and  re-substitution for him
or her and in his or her name,  place and stead, in any and all  capacities,  to
sign any and all  amendments  to this  report,  and to file  the  same  with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents,  each acting alone,  full power and authority to do and perform each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
premises, as fully to all intents and purposes as he or she might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents, each acting alone, or his substitute or substitutes,  may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

     SIGNATURE                               TITLE                     DATE
     ---------                               -----                     ----

     /s/ GEORGE E. RICHMOND     Director                          March 19, 2003
          George E. Richmond
    /s/ ALFRED E. BRENNAN, JR.  President, Chief Executive        March 19, 2003
        Alfred E. Brennan, Jr.  Officer,  Director (Principal
                                Executive Officer)
  /s/ ARTHUR L. HERBST, JR.     Executive Vice  President, Chief  March 19, 2003
        Arthur L. Herbst, Jr.   Operating Officer, Chief
                                Financial Officer, Secretary,
                                Director (Principal Financial
                                Officer and Principal Accounting Officer)
  /s/ RICHARD G. RICHMOND       Director                          March 19, 2003
        Richard G. Richmond
    /s/ RICHARD P. CONERLY      Director                          March 19, 2003
         Richard P. Conerly
       /s/ CONNIE H. DRISKO     Director                          March 19, 2003
           Connie H. Drisko
        /s/ JAMES R. O'BRIEN    Director                          March 19, 2003
           James R. O'Brien
      /s/ CRAIG E. LABARGE      Director                          March 19, 2003
           Craig E. LaBarge
        /s/ BRIAN F. BREMER     Director                          March 19, 2003
            Brian F. Bremer



<PAGE>



                                 CERTIFICATIONS
                                 --------------


I, Alfred E. Brennan, Jr., certify that:

1.       I have reviewed  this annual report on Form 10-K of Young  Innovations,
         Inc.;

2.       Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances  under which
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

3.       Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

4.       The  registrant's  other  certifying  officer and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
         and have:
          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;
          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and
          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date.

5.       The registrant's other certifying  officer and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit committee of the registrant's board of directors:
          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weakness in internal controls; and
          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         annual  report  whether  there were  significant  changes  in  internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.



Dated: March 19, 2003

                                                     /s/ Alfred E. Brennan,  Jr.
                                                     ---------------------------
                                                      Alfred E. Brennan, Jr.




<PAGE>



                              CERTIFICATIONS, CONT.
                              ---------------------


I, Arthur L. Herbst, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Young Innovations, Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
the Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;
          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and
          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date.

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
the  registrant's  board of directors:
          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weakness in internal controls; and
          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.



Dated: March 19, 2003

                                                    /s/  Arthur L. Herbst, Jr.
                                                    --------------------------
                                                    Arthur L. Herbst, Jr.




<PAGE>



                                  EXHIBIT INDEX
                                  -------------


EXHIBIT
NUMBER            DESCRIPTION
------            -----------

3.1(a)     Articles of Incorporation of Registrant and Statement of Correction

3.2(e)     Amended and Restated By-Laws of Registrant

4.1(c)     Credit Facilities Agreement among Bank of America, N.A., the other
           lenders listed therein and the Registrant dated March 20, 2001
           (the "Credit Agreement")

4.2(c)     Amendment No. 1 to the Credit Agreement dated April 20, 2001

4.3(d)     Amendment No. 2 to the Credit Agreement dated September 28, 2001

4.4(h)     Amendment No. 3 to the Credit Agreement dated September 19, 2002

10.1(e)    Amended and Restated 1997 Stock Option Plan of the Registrant

10.2(g)    Employment Agreement dated June 12, 2002, by and between Young the
           Registrant and Alfred E. Brennan, Jr.

10.3(g)    Employment Agreement dated June 12, 2002, by and between the
           Registrant and Arthur L. Herbst, Jr.

10.4(g)    Employment  Agreement  dated  June  12,  2002,  by  and  between  the
           Registrant and Eric J. Stetzel

10.5(b)    Promissory Note dated August 7, 2000, in the amount of $500,000
           payable by Alfred E. Brennan, Jr. to the Registrant

10.6(g)    Employment  Agreement  dated  April  1,  2002,  by  and  between  the
           Registrant and George E. Richmond

10.7(b)    Consulting  Agreement  dated  January 8,  2001,  by and  between  the
           Registrant and Richard G. Richmond

10.8(e)    Amendment to Richard G. Richmond Consulting Agreement dated November
           19, 2001

10.9(e)    Stock Repurchase Agreement dated November 9, 2001, by and between the
           Registrant and George E. Richmond

10.10(e)   Form  of the  Registrant's  Restricted  Stock  Award  Agreement  with
           schedule of grantees

10.11(g)   Consulting  Agreement  dated  April  1,  2002,  by  and  between  the
           Registrant and GER Consulting, Inc.

10.12(g)   Form of  Indemnity  Agreement  entered  into with each  member of the
           Registrant's Board of Directors

10.13(i)   Amendment to George E. Richmond Employment Agreement dated May 14,
           2002

10.14(i)   Amendment to GER Consulting, Inc. Consulting Agreement dated May 14,
           2002

16(f)      Letter Regarding Change of Certifying Accountants

21(i)      Subsidiaries of the Registrant

23.1(i)    Consent of KPMG LLP

23.2(i)    Information Regarding Consent of Arthur Andersen LLP

25         Power of Attorney (included on Signature page)


<PAGE>

99.1(i)    Certification pursuant to 18.U.S.C. Section 1350 as adopted pursuant
           to Section 906 of Sarbanes-Oxley Act of 2002









--------------------------------
(a)        Filed as an Exhibit to Registrant's Registration Statement
           No. 333-34971 on Form S-1 and incorporated herein by reference.
(b)        Filed as an Exhibit to Registrant's Report on Form 10-K filed on
           March 29, 2001 and incorporated herein by reference.
(c)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           August 14, 2001 and incorporated herein by reference.
(d)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           November 13, 2001 and incorporated herein by reference.
(e)        Filed as an Exhibit to Registrant's Report on Form 10-K filed on
           March 25, 2002 and incorporated herein by reference.
(f)        Filed as an Exhibit to Registrant's Report on Form 8-K filed on
           June 17, 2002 and incorporated herein by reference.
(g)        Filed as an Exhibit to Registrant's Report on Form 10-Q filed on
           August 14, 2002 and incorporated herein by reference.
(h)        Filed as an Exhibit to Registrant's Report on Form 10-Q/A filed on
           November 11, 2002 and incorporated herein by reference.
(i)        Filed herewith.




<PAGE>




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Young Innovations, Inc.:

We have audited in accordance with auditing standards  generally accepted in the
United States, the consolidated financial statements of Young Innovations,  Inc.
and  subsidiaries  included in this Form 10-K Annual  Report and have issued our
report  thereon  dated  February  4, 2002  (except  with  respect  to the matter
discussed in Note 22, as to which the date is March 22,  2002).  Our audits were
made for the purpose of forming an opinion on those statements taken as a whole.
Schedule II included in this Form 10-K Annual  Report is the  responsibility  of
the Company's  management and is presented for the purpose of complying with the
Securities  and  Exchange  Commission's  rules  and is  not  part  of the  basic
financial  statements.   This  schedule  has  been  subjected  to  the  auditing
procedures  applied in the audits of the basic financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.



ARTHUR ANDERSEN LLP

Chicago, Illinois
February 4, 2002 (except with respect to the matter  discussed in Note 22, as to
which the date is March 22, 2002)



THIS IS A COPY OF THE AUDIT REPORT  PREVIOUSLY  ISSUED BY ARTHUR  ANDERSEN  LLP,
WHICH HAS CEASED OPERATIONS, IN CONNECTION WITH YOUNG INNOVATIONS, INC.'S FILING
ON FORM 10-K FOR THE YEAR ENDED  DECEMBER  31,  2001.  THIS AUDIT REPORT HAS NOT
BEEN  REISSUED BY ARTHUR  ANDERSEN  LLP IN  CONNECTION  WITH THIS FILING ON FORM
10-K. SEE EXHIBIT 23.2 FOR FURTHER DISCUSSION.



<PAGE>

<TABLE>

                    YOUNG INNOVATIONS, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 2000, 2001, and 2002
                                 (IN THOUSANDS)

<CAPTION>


                                                       ADDITIONS
                                                -------------------------

                                  BALANCE       CHARGED TO                                    BALANCE
                                  BEGINNING     COSTS AND                                     AT END
                                   OF YEAR      EXPENSES     ACQUISITIONS      DEDUCTIONS     OF YEAR
                                   -------      --------     ------------      ----------     -------

Allowance for doubtful
 Receivables

<C>                                  <C>           <C>           <C>               <C>           <C>
2000......................           228           (25)          100               83            220
2001......................           220            51           255               82            444
2002......................           444           204            11              274            385



</TABLE>